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Posts Tagged ‘portfolios’

Diagonal Condor Earnings Strategy Update #5 – Mastercard (MA)

Tuesday, April 24th, 2018

When using the Diagonal Condor Earnings Strategy, one of the things we like to find is a stock about to announce earnings where the options have priced in a post-announcement price fluctuation which is greater than the historical average of the post-announcement changes for that company.

Our goal is to create two diagonal spreads at a credit (or slight debit) which allow for a profit to be made if the post-announcement fluctuation is within the historical average amount.  In the past few weeks, we have placed spreads that met these criteria on several companies, including Carmax (KMX), TD Ameritrade (AMTD), and Red Hat (RHT), and these plays were all profitable, with returns from 30% to over 70% including commissions in a single week.

This week, we are looking forward to taking a position in Mastercard (MA) which announces earnings before the market opens on May 2.  The 4May18 options have priced a 3.8% post-announcement price change while the average change for the last eight quarters has been only 1.1% (about $2 when the stock is trading about $175).

Here are the trades we made this week using the Diagonal Condor Earnings Strategy that is outlined here in case you missed it earlier. Here are the spreads we will place just prior to May 2 (prices as they exist now):

Buy To Open MA 1Jun18 170 puts (MA180601P170)
Sell To Open MA 4May18 175 puts (MA180504P175) for a credit of $.25 (buying a diagonal)

Buy To Open MA 1Jun18 182.5 calls (MA180601C182.5)
Sell To Open MA 4May18 177.5 calls (MA180504C177.5) for a credit of $.17 (buying a diagonal)

After paying a commission of $2.50 per spread at the commission rate charged to Terry’s Tips subscribers at thinkorswim, each pair of spreads will incur a maintenance requirement of $500 less the $42 plus the $5 commission, making it an investment of $463 (the maximum theoretical loss).  One of the spreads is guaranteed to make a gain no matter what the stock might do after the announcement.

Here is the risk profile graph for the above spreads, assuming that implied volatility (IV) of the 1Jun18 option series will fall by 3, from 28 to 25 after the announcement.  This compares to the current IV of the 4May18 series which carries an IV of 35.

MA Risk Profile Graph April 2018

MA Risk Profile Graph April 2018

The break-even range for these positions goes from about $170 to $183.  If the price ends up at any price within this range, there should be a profit.  Historically, the stock has fluctuated by an average of about $2, which would place it between $173 and $177.

If the historical fluctuation continues, these positions could deliver 60% or more on investment for a single week of waiting it out.

If the stock fluctuates more than we expect (and finishes outside of the break-even range), we would roll over the expiring options before they expire on May 4 and sell new weekly out-of-the-money options for the 11May18 series, and continue doing so until we took in sufficient new premium to make the entire experience a profitable one.  We would have five weekly opportunities to accomplish this.  Of course, nothing is guaranteed, but weekly fluctuations tend to be much more moderate once the earnings week has passed, and that is the kind of market where this kind of diagonal or calendar spreads do their best.

If the stock fluctuates more than $2.50 from the $166.36 price when we placed the spreads, you might want to adjust the strike prices by $2.50 in the same direction.

Final note: MA has been a good underlying for Terry’s Tips.  In 2017, one of our actual portfolios traded MA options, and the portfolio gained 152% for the year. You can get a full (and free) report on how this worked out by requesting it below.

Facebook (FB) Play – Diagonal Condor Earnings Strategy

Wednesday, April 18th, 2018

Here is the link to the Seeking Alpha article on FB: https://seekingalpha.com/article/4164510-expect-facebook-earnings-announcement

This article explains our thinking behind the trades we suggested for the upcoming Facebook’s earnings announcement taking place next week.  See full recommendation below. 

Facebook (FB) announces earnings after the close on April 24, 2018.  I have submitted an article to Seeking Alpha outlining the reasons I believe that the stock will trade higher (or at least, not lower) after the announcement compared to its current level. If they accept my article for publication, I will send you the link.  If they don’t accept it in a timely basis, I will send it along to you.

Here are the trades we made this week in accordance with this positive post-announcement outlook using the Diagonal Condor Earnings Strategy that is outlined here in case you missed it earlier.  Note that one of the diagonals is being placed at a slight debit, a small deviation from the strategy.  This should not be a problem because the 1Jun18 options are considerably higher than this debit, and will surely hold up enough so that one of the two spreads is guaranteed to be a serious gainer.

BTO 1 FB 1Jun18 160 put (FB180601P160)
STO 1 FB 27Apr18 165 put (FB180427P165) for a credit of $.25 (buying a diagonal)

BTO 1 FB 1Jun18 177.5 call (FB180601C177.5)
STO 1 FB 27Apr18 172.5 call (FB180427C172.5) for a debit of $.28 (buying a diagonal)

IV of the 27Apr18 options is 47 compared to 31 for the 1Jun18 series (this huge difference is what makes this play so potentially profitable).

Here is the risk profile graph for these spreads assuming that IV for the 1Jun18 series will fall from 31 to 26 after the announcement.  I think there is a fair chance that it will not fall that far, and the results could be even better than what is indicated below:

Facebook Risk Profile Graph April 2018

Facebook Risk Profile Graph April 2018

These spreads require a maintenance requirement of just over $500 per pair of spreads.  One of them is guaranteed to make a gain no matter what the stock price does.

For the past 8 quarters, FB’s post-announcement fluctuation has averaged 3%.  This graph shows that a profit should result if the stock fluctuates less than $5 (about 3%) in either direction.  The potential gains are over 60% for a one-week play if the stock fluctuates less than $5 (and ends up at any price between $165 and $173).

If the stock fluctuates more than $2.50 from the $166.36 price when we placed the spreads, you might want to adjust the strike prices by $2.50 in the same direction.

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

Happy trading,

Terry

Arista Networks (ANET): Should You Buy the Dip?

Monday, March 26th, 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

Arista Networks (ANET): Should You Buy the Dip?

Upside price targets for Arista Networks have recently been raised by several analysts, here are two of them – Arista Networks PT Raised to $270.00 at BMO Capital Markets and Arista Networks PT Raised to $330 at Oppenheimer Following Management Meetings

ANET dipped lower in the past week inline with the broader market correction that took place.  The stock price ended the week at a horizontal level near $264 that has acted as both support and resistance in the year thus far.  Further support is seen slightly below horizontal support in the form of a rising trendline originating from a low posted in early November.  Most of the stocks listed in the IBD Top 50 list of companies have dipped lower as a result of last week’s market correction but ANET stands out as it has had a strong performance, relative to the list, since turning higher in early 2016.

ANET Chart March 2018

ANET Chart March 2018

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

Buy To Open ANET 20APR18 255 Puts (ANET180420P255)
Sell To Open ANET 20APR18 260 Puts (ANET 180420P260) for a credit of $1.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $265.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $196 and your broker would charge a $500 maintenance fee, making your investment $304 ($500 – $196).  If ANET closes at any price above $260.00 on April 20, both options would expire worthless, and your return on the spread would be 64% (735% annualized).

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

IBD Underlying Updates March 22, 2018

IBD Underlying Updates March 22, 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

Nvidia (NVDA) Is on the Verge of a Big Breakout

Sunday, March 18th, 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.  The Terry’s Tips portfolio that trades these spreads in an actual account for subscribers to follow on their own or have trades made for them in their account through the free Auto-Trade service offered by thinkorswim has gained 79% so far in 2018.

Terry

Nvidia (NVDA) Is on the Verge of a Big Breakout

Several analysts have an optimistic outlook towards NVDA despite the stock trading near some important resistance.  Here are two of them – Things Are Going Right for NVIDIA and AMD and Semiconductor Stocks Soar to Highest Level in Decades Despite Deal Woes.

NVDA tested resistance at the big psychological $250 price point in the past week for the third time this year.  However, with momentum indicators showing no signs of a top and as triple tops are generally rare, the probabilities suggest sellers will give up defending the resistance level.  Retracements from the level have also become increasingly narrow since the initial approach in early February which provides a technical indication that buyers are regaining control.  When a big level such as the one we are seeing in Nvidia now breaks, it often accompanies some sharp upside follow through.

NVDA Chart March 2018 on the rise

NVDA Chart March 2018

*source Tradingview.com

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

Buy To Open NVDA 20APR18 245 Puts (NVDA180420P245)
Sell To Open NVDA 20APR18 250 Puts (NVDA180420P250) for a credit of $2.20 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $250.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $218 and your broker would charge a $500 maintenance fee, making your investment $282 ($500 – $218).  If NVDA closes at any price above $250.00 on April 20, both options would expire worthless, and your return on the spread would be 77% (882% annualized).

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

IBD Underlying Updates March 15, 2018

IBD Underlying Updates March 15, 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

Will Paypal (PYPL) Continue Its Upward Momentum?

Monday, March 12th, 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. The actual portfolio at Terry’s Tips where we place the trades we tell you about a couple of days later is now ahead 84% so far in 2018, and that includes our closing out the BABA spread last week at a slight loss when we could have made the max gain if we had waited three more days until expiration.  Even we make bad trades once in a while (although we still believe we made the prudent move – no one could have predicted that BABA would soar $11 in the last three days before expiration).

Terry

Will Paypal (PYPL) Continue Its Upward Momentum?

Several articles have recently been published on the positive outlook for PYPL.  Here are two of them – Paypal Holdings Stock Is Itching for a Breakout and BMO Capital Markets Boosts Paypal Price Target to $89.00.

As the above technical article has mentioned, the 20-period moving average on a weekly chart held Paypal stock higher following the earnings-inspired correction in early February.  PYPL has since climbed back above the same moving average on a daily chart, which has held declines in the month thus far.  The stock has also breached above the psychological $80 price point which had held prices lower in late February.

PYPL Chart March 2018

*source Tradingview.com

If you agree there’s further upside ahead for Paypal, 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 PYPL 20APR18 77.5 Puts (PYPL180420P77.5)
Sell To Open PYPL 20APR18 80 Puts (PYPL180420P80) for a credit of $0.83 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $81.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $81 and your broker would charge a $250 maintenance fee, making your investment $169 ($250 – $81).  If PYPL closes at any price above $80.00 on April 20, both options would expire worthless, and your return on the spread would be 48% (449% annualized).

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

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

TD Ameritrade (AMTD): A Stable and Consistent Player

Monday, March 5th, 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

TD Ameritrade (AMTD): A Stable and Consistent Player

Several analysts have a bullish outlook for TD Ameritrade, here are two of them: TD Ameritrade Rating Reiterated by Goldman Sachs Group and TD Ameritrade PT Raised to $61.00

AMTD faced some volatile price action in February as the global equity markets fell under pressure and broadly corrected lower.  In the past week, AMTD broke to a fresh 19 year high prior to pulling back.  The bullish break is suggesting the stock has resumed higher within its broader uptrend while the pullback offers an entry point against support from the 20-period daily moving average.

AMTD Chart March 2018

AMTD Chart March 2018

*source Tradingview.com

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

Buy To Open AMTD 6APR18 54.5 Puts (AMTD180406P54.5)
Sell To Open AMTD 6APR18 57.5 Puts (AMTD180406P57.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMTD was trading near $57.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $0.96 and your broker would charge a $210 maintenance fee, making your investment $110 ($206 – $96).  If AMTD closes at any price above $57.50 on April 6, both options would expire worthless, and your return on the spread would be 52% (597% annualized).

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

IBD Underlying Updates March 1, 2018

IBD Underlying Updates March 1, 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

Is Floor & Decor (FND) stock offering an entry point?

Monday, February 19th, 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. The actual portfolio we conduct at Terry’s Tips using these trades has gained 36% over the first six weeks of 2018 in spite of losing money on one of the spreads.  The average of all our portfolios has gained 23.2% while the market (SPY) is up only 2.2%.

Terry

Is Floor & Decor (FND) stock offering an entry point?

Several analysts expect further upside for FND stock, one analyst has recently revised up price targets to $50 and this article discusses recent favorable coverage in the media.

FND is seen bouncing from a  notable confluence of support near the $43 price point.  The area contains a horizontal level at $42.43 that was previously major resistance that is not seen as support.  Also, the lower line of a rising trend channel is found near the horizontal level.  The combination offers strong downside support and price action so far has shown buyers to protect the area.

FND Chart February 2018

FND Chart February 2018

*source Tradingview.com

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

Buy To Open FND 16Mar18 40 Puts (FND180316P40)
Sell To Open FND 16Mar18 45 Puts (FND180316P45) for a credit of $1.53 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FND was trading near $45.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $1.51 and your broker would charge a $500 maintenance fee, making your investment $349 ($500 – $151).  If FND closes at any price above $45.00 on March 16, both options would expire worthless, and your return on the spread would be 43% (632% annualized).

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

IBD Underlying Updates February 15, 2018

IBD Underlying Updates February 15, 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.

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

Happy trading,

Terry

Wingstop (WING) Rallies on Earnings Forecast, Can It Continue the Momentum?

Tuesday, January 16th, 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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.  The Terry’s Tips actual portfolio that executes these trades has gained 26% in the first two weeks of 2018 and is our third-best performing portfolio so far in this new year.

Terry

Wingstop (WING) Rallies on Earnings Forecast, Can It Continue the Momentum?

Wingstop shares have already made an impressive gain in the first few weeks of the new year and several analysts believe there is further upside ahead.  CNBC has published an article outlining the factors driving the recent rally while Wingstop CEO Charlie Morrison shares his outlook for growth in a video interview with Jim Cramer.

Wingstop stock closed at a record high in the past week after taking out notable horizontal resistance around $43 which was also last year’s high.  The horizontal level is now seen as downside support and several retests of the level following the technical break have been met with buyers.

WING Chart January 2018

WING Chart January 2018

*source Tradingview.com

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

Buy To Open WING 16Feb18 40 Puts (WING180216P40)
Sell To Open WING 16Feb18 45 Puts (WING180216P45) for a credit of $1.28 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when WING was trading near $45.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $126 and your broker would charge a $500 maintenance fee, making your investment $374 ($500 – $126).  If WING closes at any price above $45 on February 18, both options would expire worthless, and your return on the spread would be 34% (384% annualized).

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

IBD Underlying Updates January 11, 2018

IBD Underlying Updates January 11, 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

Arista Networks (ANET) Hits Fresh All-Time Highs, What’s Next?

Monday, November 6th, 2017

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 portfolios to spot outperforming stocks and place spreads that profit if the momentum continues.  Actually, the stock can even decline a little for the maximum gain to be made.

The 10 portfolios carried out by Terry’s Tips for its paying subscribers had its best week ever last week, gaining an average of 9.1%.  The composite portfolio average for 2017 has soared to 120%.  Isn’t it time for you to see exactly how we are doing it?

Terry

Arista Networks (ANET) Hits Fresh All-Time Highs, What’s Next?

Several analysts are optimistic about Arista Network’s future following their earnings report last week, here are two of them – Arista Networks Keeps Enjoying Soaring Sales and Why Shares of Arista Networks Are Surging Today.

ANET fell under pressure last week ahead of its earnings report, falling just over 10% in a two-day correction.  The turn lower led to a break of the 20 period daily moving average as well as a rising trendline that had been in play for nearly three months.  However, the stock recovered after the earnings beat and closed the week out at a fresh all-time high.  Although the rising trendline is no longer in play as support, the break back above it as well as the moving average signals that buyers have regained control.

 

ANET Chart Novmeber 2017

ANET Chart Novmeber 2017

*source Tradingview.com

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

Buy To Open ANET 15Dec17 195 Puts (ANET171215P195)
Sell To Open ANET 15Dec17 200 Puts (ANET171215P200)for a credit of $2.23 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ANET was trading near $201.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $221 and your broker would charge a $500 maintenance fee, making your investment $279 ($500 – $221).  If ANET closes at any price above $200 on December 15, 2017, both options would expire worthless, and your return on the spread would be 79% (741% annualized).

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

BD Underlying Updates November 2, 2017

BD Underlying Updates November 2, 2017

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

Is SVB Financial Group (SIVB) Ready To Continue Higher After The Price Correction?

Monday, October 23rd, 2017

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 portfolios to identify outperforming stocks and place spreads that take advantage of the underlying trend and momentum.

I did want you to know that the 10 actual option portfolios carried out at Terry’s Tips  for paying subscribers reached an important milestone this week.  These portfolios use a variety of pre-determined options strategies and differing underlying stocks or ETPs.  If you had invested in all 10 portfolios in January 2017, you would have invested $48,600.  This week, the composite value of those portfolios reached $97,742, a gain of 101%.  For the first time, we are up 100% for the year.  A milestone to celebrate!  Isn’t it time that you learned how we did it so that you could enjoy these kinds of returns in your own investment account?

Terry

Is SVB Financial Group (SIVB) Ready To Continue Higher After The Price Correction?

SIVB recently broke higher from a correction that had taken place since March.  The stock price started trending higher in late September and made a series of technical breaks by regaining its 200-period daily moving average and breaking above a declining trend channel that had encompassed the roughly six-month correction.

SIVB corrected lower last week following the technical break but turned higher after retesting the broken trend channel, slightly ahead of the 200-period daily moving average.  The stock price ended the week near 189.50 after a gap higher inspired by the earnings report, taking out resistance at 186.09 which was a hurdle in May and August.  The trend channel which is found on a daily chart resembles a flag pattern and the recent upside break signals a bullish continuation.

SIVB Chart October 2017

SIVB Chart October 2017

*source Tradingview.com
If you agree there’s further upside ahead for SVB Financial Group, consider this trade which is a bet that the stock will continue to advance at least a little bit over the next four weeks.

Buy To Open SIVB 17Nov17 185 Puts (SIVB171117P185)
Sell To Open SIVB 17Nov17 190 Puts (SIVB171117P190) for a credit of $2.08 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when SIVB was trading near $189.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee).  Each contract would then yield $206 and your broker would charge a $500 maintenance fee, making your investment $294 ($500 – $206).  If SIVB closes at any price above $190 on November 17, 2017, both options would expire worthless, and your return on the spread would be 70% (1023% annualized).

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

IBD Underlying Updates October 19, 2017

IBD Underlying Updates October 19, 2017

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

Making 36%

Making 36% — A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

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Success Stories

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.

~ John Collins