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Posts Tagged ‘Puts’

Dell Technologies (DELL) Earnings Keep Uptrend Intact

Monday, March 1st, 2021

DELL reported quarterly results Thursday after the bell that easily beat expectations on both revenue and earnings. The company shipped more than 50 million PCs in 2020, a record high, taking advantage of the higher demand for home-based activities amid the pandemic. In response, several analysts raised their price targets, ranging up to $101, $20 higher than Friday’s close.

The strong results kept DELL’s stock price headed in the right direction. For the week, the stock ticked slightly higher, which is impressive given the Nasdaq’s 5% plunge. In the intermediate term, the stock has been riding along its rising 20-day moving average since crossing above it more than three months ago. Note that the short strike of our credit spread (red line below) lies below the 20-day and the recent lows near $78, so this dual support would need to break for the spread to move into the money.

DELL Chart March 2021 - Record High

DELL Chart March 2021

If you agree DELL’s uptrend will continue, or at least stay above $78, consider the following trade that relies on the stock remaining above $77.50 through expiration in seven weeks.

Buy to Open DELL 16Apr21 75 Put (DELL210416P75)
Sell to Open DELL 16Apr21 77.5 Put (DELL210416P77.5) for a credit of $0.90 (selling a vertical)

This credit is $0.03 less than the mid-point of the option spread when DELL was trading near $81. 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 $88.70. This reduces your buying power by $250 and makes your investment $161.30 ($250 – $88.70).  If DELL closes above $77.50 on April 16, both options will expire worthless, and your return on the spread would be 55% ($88.70 / $161.30), or 408% annualized.

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

Happy trading,

Terry

Taiwan Semiconductor (TSM) Booming as Chip Shortage Continues

Monday, February 22nd, 2021

TSM is in a sweet spot. It’s one of the few manufacturers of chips amid a worldwide shortage, especially in the automotive industry. TSM is a true manufacturer that provides chips to several semiconductor companies that have turned to outsourcing their production needs.

The stock is already up 25% this year as it rides along the support of its 20-day moving average. In fact, the stock has closed just one day below this trendline since early November. The shares pulled back this week but found support once again at the 20-day on Friday. With strong support and a full production pipeline, TSM seems unstoppable. And we’re entering a bullish position on a pullback.

TSM Chart February 2021- Rally continues

TSM Chart February 2021

If you agree TSM’s rally will continue, consider the following trade that relies on the stock remaining above $135 through expiration in four weeks.

Buy to Open TSM 19MAR21 130 Put (TSM210319P130)
Sell to Open TSM 19MAR21 135 Put (TSM210319P135) for a credit of $2.00 (selling a vertical)

This credit is $0.05 less than the mid-point of the option spread when TSM was trading near $137.  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 $198.70. This reduces your buying power by $500 and makes your investment $301.30 ($500 – $198.70).  If TSM closes above $135 on March 19, both options will expire worthless, and your return on the spread would be 66% ($198.70 / $301.30), or 857% annualized.

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

Happy trading,

Terry

ServiceNow (NOW) Shows a Renewal of Upward Momentum After Breaking to an All-Time High

Monday, February 8th, 2021

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.

ServiceNow pushed upward to a fresh all-time high in the past week. The following two articles outline some of the reasons that are driving the growth – ServiceNow: The Workflow Revolution Is Happening and ServiceNow delivers strong Q4 as it expands wallet share.

Technicals

The monthly candle for NOW in January hinted of a potential pullback but the recent surge to new highs indicates otherwise. The upward trend remains intact for this stock and the expectation is that dips will be bought over the near-term. A rising trendline that dates to May last year held the decline last month where a small consolidation took place showing that buyers are ready to step in on dips. Near-term support is seen at the December high of $566.75.  There is momentum behind the move in the past week which suggest the rally will continue although it would not be surprising to see brief period of sideways trading to work off overbought conditions on the smaller time frames.

NOW Chart February 2021

NOW Chart February 2021

If you agree there’s further upside ahead for NOW, consider this trade which relies on the stock remaining above $590 through the expiration in five weeks.

Buy To Open NOW 12MAR21 587.5 Puts (NOW210312P587.5)
Sell To Open NOW 12MAR21 590 Puts (NOW210312P590) for a credit of $1.38 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when NOW was trading near $590.  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 $136.70. This reduces your buying power by $250 and makes your investment $113.30 ($250 – $136.70).  If NOW closes at any price above $590 on March 12, both options will expire worthless, and your return on the spread would be 121% ($136.70 / $113.30), or 1380% annualized.

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

IBD Underlying Updates February 6, 2021

IBD Underlying Updates February 6, 2021

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

Wedbush Raises Price Target for Microsoft (MSFT) to $270

Monday, February 1st, 2021

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.

Wedbush recently raised their MSFT price target to $270 from $260 and said they see potential for it to reach as high as $300. The following two article discuss the price upgrade and reasons why MSFT appears poised to grow – Microsoft will leap another 20% as cloud-computing strength drives strong earnings, Wedbush says and Microsoft: Still Not Fully Priced, Here’s Why.

Technicals

From a technical perspective, MSFT recently posted a bullish breakout above a horizontal resistance level at $225. This same level had capped rallies three times in the fourth quarter of 2020 and is seen as strong support in the event the stock pulls back further from here. There is also support at $231.15 which marks the late August high.

MSFT Chart February 2021 - Undervalued

MSFT Chart February 2021

If you agree there’s further upside ahead for MSFT, consider this trade which relies on the stock remaining above $230 through the expiration in five weeks.

Buy To Open MSFT 05MAR21 225 Puts (MSFT210305P225)
Sell To Open MSFT 05MAR21 230 Puts (MSFT210305P230) for a credit of $1.73 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MSFT was trading near $232.  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 $171.70. This reduces your buying power by $500 and makes your investment $328.30 ($500 – $171.70).  If MSFT closes at any price above $230 on March 5, both options will expire worthless, and your return on the spread would be 52% ($171.70 / $328.30), or 593% annualized.

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

IBD Underlying Updates January 30, 2021

IBD Underlying Updates January 30, 2021

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

Buy the Dip in Taiwan Semiconductor (TSM)

Monday, January 25th, 2021

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.

TSM’s solid fundamentals and positive technical outlook makes it an attractive stock to buy on dips. Take a look at what the following two articles have to say about the company’s growth prospects – Taiwan Semi Is Betting $28 Billion on Rising Demand for Chips and Taiwan Semiconductor Manufacturing: Our Top Technology Pick For 2021 Is At The Heart Of The Next Wave Of Technology.

Technicals

If you zoom out to a larger timeframe like a weekly or monthly chart, it’s pretty much been a straight line up for TSM. The stock has posted a 47% gain over the last three months and has advanced 124% from a year ago. Dips have been shallow during this time which means the current 5% decline from recent highs could be a buying oppurtunity. Support is in play from the lower line of a rising trend channel that has contained price action since late December. There is also a horizontal level near the bottom of the channel at $128.50 to create a support confluence.

TSM Chart January 2021 - Straight up trend

TSM Chart January 2021

If you agree there’s further upside ahead for TSM, consider this trade which relies on the stock remaining above $129 through the expiration in five weeks.

Buy To Open TSM 26FEB21 126 Puts (TSM210226P126)
Sell To Open TSM 26FEB21 129 Puts (TSM210226P129) for a credit of $1.45 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when TSM was trading near $129.  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 $143.70. This reduces your buying power by $300 and makes your investment $156.30 ($300 – $143.70).  If TSM closes at any price above $129 on February 26, both options will expire worthless, and your return on the spread would be 92% ($143.70 / $156.30), or 1049% annualized.

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

IBD Underlying Updates January 23, 2021

IBD Underlying Updates January 23, 2021

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 Logitech (LOGI) Continue to Post Steady Gains?

Monday, January 18th, 2021

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.

LOGI has rallied 230% from its lows last year and several analysts expect the upward move will continue, here are two of them – Logitech (LOGI) Reports Next Week: Wall Street Expects Earnings Growth and 5 Computer Stocks to Buy That Aren’t Apple or Microsoft.

Technicals

A steady uptrend has been taking place since November. During this time, the stock has been trading within a rising channel and shallow dips have been bought. With LOGI pulling back towards channel support, there could be a good buying oppurtunity around current levels. The 20-Day moving average also comes in to play near the lower bound of the trend channel to create a confluence of support.

LOGI Chart January 2021 - steady gains

LOGI Chart January 2021

If you agree there’s further upside ahead for LOGI, consider this trade which relies on the stock remaining above $100 through the expiration in five weeks.

Buy To Open LOGI 19FEB21 95 Puts (LOGI210219P95)
Sell To Open LOGI 19FEB21 100 Puts (LOGI210219P100) for a credit of $2.08 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when LOGI was trading near $101.  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 $206.70. This reduces your buying power by $500 and makes your investment $293.30 ($500 – $206.70).  If LOGI closes at any price above $100 on February 19, both options will expire worthless, and your return on the spread would be 70% ($206.70 / $293.30), or 798% annualized.

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

IBD Underlying Updates January 16, 2021

IBD Underlying Updates January 16, 2021

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

Thermo Fisher (TMO) Shows Renewed Upward Momentum

Monday, January 11th, 2021

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.

TMO shows signs it has reverted to an uptrend and with a strong fundamental outlook, the stock could see a continuation higher. The following two articles provide more details on the fundamentals of the company  –  Why the Earnings Surprise Streak Could Continue for Thermo Fisher and Is Thermo Fisher Scientific Inc.’s Latest Stock Performance Being Led By Its Strong Fundamentals?

Technicals

The appeal to TMO from the technical side of things is the resurgence of upward momentum since the start of the new year, TMO has broken higher from a flag pattern that had contained it for most of December and it has rallied above a horizontal level near $482. A small dip can’t be ruled out over the short term but the price action seems to suggest that TMO is ready to resume the prior uptrend with an aim for a new all-time high.

TMO Chart January 2021 - Renewed uptrend

TMO Chart January 2021

If you agree there’s further upside ahead for TMO, consider this trade which relies on the stock remaining above $510 through the expiration in five weeks.

Buy To Open TMO 19FEB21 500 Puts (TMO210219P500)
Sell To Open TMO 19FEB21 510 Puts (TMO210219P510) for a credit of $3.78 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when TMO was trading near $512.  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 $376.70. This reduces your buying power by $1000 and makes your investment $623.30 ($1000 – $376.70).  If TMO closes at any price above $510 on February 19, both options will expire worthless, and your return on the spread would be 60% ($376.70 / $623.30), or 684% annualized.

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

IBD Underlying Updates January 9, 2021

IBD Underlying Updates January 9, 2021

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

Marvell Tech (MRVL) – An Outperformer Among Its Peers

Monday, January 4th, 2021

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.

MRVL gained 79% last year compared to a smaller rise of 51% in the SOXX Semiconductor ETF. The following two articles discuss why MRVL could continue to see more upside – These 3 Chip Stocks Have Room to Grow, Say Top Analysts and Top-Rated Stocks: Marvell Technology’s Technical Ratings Rise.

Technicals

After a recent break to an all-time high MRVL has been consolidating within a range for two weeks. Strong support is seen to the downside near $45.60 as this level acted as resistance back in November. There is also a rising trendline near the same price point as well as the 20-day moving average. With strong support to the downside, it might only be a matter of time before MRVL makes another run for new highs.

MRVL Chart January 2021 - Rising

MRVL Chart January 2021

If you agree there’s further upside ahead for MRVL, consider this trade which relies on the stock remaining above $47.50 through the expiration in five weeks.

Buy To Open MRVL 5FEB21 45 Puts (MRVL21025P45)
Sell To Open MRVL 5FEB21 47.5 Puts (MRVL21025P47.5) for a credit of $1.00 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MRVL was trading near $47.50.  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 $98.70. This reduces your buying power by $250 and makes your investment $151.30 ($250 – $98.70).  If MRVL closes at any price above $47.50 on February 5, both options will expire worthless, and your return on the spread would be 65% ($98.70 / $151.30), or 741% annualized.

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

IBD Underlying Updates January 2, 2021

IBD Underlying Updates January 2, 2021

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

Consider Bristol-Myers (BMY) After a Price Upgrade from Goldman Sachs

Monday, December 28th, 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.

Goldman Sachs recently upgraded BMY to a ‘Conviction Buy’ and assigned a price target of $86. There have been some other recent upgrades which are discussed in this article – Bristol-Myers Squibb (NYSE:BMY) Upgraded to “Conviction-Buy” by The Goldman Sachs Group. Also check out the following article which outlines why investors may see value in BMY at current prices – 3 Cheap Dividend Stocks For High Total Returns.

Technicals

From a technical perspective, BMY has mostly traded in a broad range after a strong rally in the second quarter. The technicals show that the uptrend remains intact and with a confluence of support nearby, this might be a good time to consider an entry. Support for BMY comes from the lower line of a rising trend channel that started in June. The 200-Day moving average falls near the lower channel line to create a strong area of support for the stock.

BMY Chart December 2020 - Conviction Buy

BMY Chart December 2020

If you agree there’s further upside ahead for BMY, consider this trade which relies on the stock remaining above $61 through the expiration in five weeks.

Buy To Open BMY 29JAN21 58 Puts (BMY210129P58)
Sell To Open BMY 29JAN21 61 Puts (BMY210129P61) for a credit of $1.15 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when BMY was trading near $61.  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 $113.70. This reduces your buying power by $300 and makes your investment $186.30 ($300 – $113.70).  If BMY closes at any price above $61 on January 29, both options will expire worthless, and your return on the spread would be 61% ($113.70 / $186.30), or 696% annualized.

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

IBD Underlying Updates December 26, 2020

IBD Underlying Updates December 26, 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

Advanced Micro Devices Signals More Upside After Breaking to a Record High

Monday, December 21st, 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.

AMD has been in a steady uptrend since the start of November and looks set to continue the trend. Check out what the following two articles have to say about the stock – Buying Stocks for Christmas? Put These Tech Stocks Under the Tree and Jim Cramer: Focus on Single Semiconductor Names, Stay Away from ETF Baskets.

Technicals

From a technical standpoint, AMD has confirmed that it has resumed the uptrend by breaking above the September peak. The stock now shows strong support near the September high, around $94. Further support is found slightly below it from a confluence created by the 20-Day moving average and the lower line of a rising trend channel. In addition to the technical chart, AMD has been steadily outperforming the semiconductor index (SOX) and Intel (INTC) for four years.

AMD Chart December 2020 - record breaking momentum

AMD Chart December 2020

If you agree there’s further upside ahead for AMD, consider this trade which relies on the stock remaining above $96 through the expiration in five weeks.

Buy To Open AMD 22JAN21 93 Puts (AMD210122P93)
Sell To Open AMD 22JAN21 96 Puts (AMD210122P96) for a credit of $1.10 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when AMD was trading near $96.  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 $108.70. This reduces your buying power by $300 and makes your investment $191.30 ($300 – $108.70).  If AMD closes at any price above $96 on January 22, both options will expire worthless, and your return on the spread would be 57% ($108.70 / $191.30), or 650% annualized.

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

IBD Underlying Updates December 19, 2020

IBD Underlying Updates December 19, 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

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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