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Posts Tagged ‘PANW’

Palo Alto Networks (PANW) Soars Following Earnings Beat

Monday, November 23rd, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

PANW rallied to fresh all-time highs after first-quarter earnings and revenue surpassed analyst expectations. In addition to the earnings report, Palo Alto Networks is acquiring a cybersecurity company that stands to boost its competitive edge. The following two articles provide more detail – BofA Turns Bullish On Palo Alto Networks After Q1 Beat and Palo Alto Networks: Why Expanse Is A Game Changer.

Technicals

Monday’s earnings report offered the catalyst for a bullish break of a flag pattern that had been forming for several months. The technical break signals a bullish continuation of the trend that took place in the second and third quarter. PANW has shown a steady rise in upward momentum since the start of the month and investors may look to continue buying on shallow dips.

PANW Chart November 2020 - All time high

PANW Chart November 2020

If you agree there’s further upside ahead for PANW, consider this trade which relies on the stock remaining above the $290 level through the expiration in six weeks.

Buy To Open PANW 31DEC20 285 Puts (PANW201231P285)
Sell To Open PANW 31DEC20 290 Puts (PANW201231P290) for a credit of $2.05 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when PANW was trading near $292.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $203.70. This reduces your buying power by $500 and makes your investment $296.30 ($500 – $203.70).  If PANW closes at any price above $290 on December 31, both options will expire worthless, and your return on the spread would be 69% ($203.70 / $296.30), or 646% annualized.

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates November 21, 2020

IBD Underlying Updates November 21, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Palo Alto Networks (PANW) Breaks to Record Highs, What’s Next?

Sunday, July 15th, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Palo Alto Networks (PANW) Breaks to Record Highs, What’s Next?

Palo Alto Networks has seen a remarkable rise in its stock price over the last few years and several articles on The Motley Fool suggest there will be further upside.  Here are the latest two – Palo Alto Networks’ Bull Run Probably Won’t Be Ending Anytime Soon and Forget Cryptocurrencies: You’re Better Off Buying These 3 Stocks.

On a daily chart, PANW appears to be consolidating in a range since around the middle of May.  However, a closer look reveals a notable technical break.  Range support near $200 wasn’t just important because of the psychological implications, the level also triggered a sharp turn in 2015 that led to a two-year correction.  Although there have been marginal breaches below the level since the stock price initially climbed above it a few months ago, bears have been unable to drive the stock price below it on a sustained basis.  To the upside, resistance near $216 had capped rallies in June but the recent bullish break of the level suggests the uptrend has resumed.

PANW Chart July 2018

PANW Chart July 2018

*source Tradingview.com

If you agree there’s further upside ahead for PANW, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open PANW 24AUG18 212.5 Puts (PANW180824P212.5)
Sell To Open PANW 24AUG18 215 Puts (PANW180824P215) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PANW was trading near $216.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $92.50 and your broker would charge a $250 maintenance fee, making your investment $157.50 ($250 – $92.50).  If PANW closes at any price above $215 on August 24, both options would expire worthless, and your return on the spread would be 59% (552% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 12, 2018

IBD Underlying Updates July 12, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

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