Posts Tagged ‘Volatility’
Monday, July 6th, 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.
Several analysts have positive things to say about Kroger, here are two of them – Kroger: How The COVID-19 Crisis Could Provide Long-Term Tailwinds and Are Investors Undervaluing Kroger (KR) Right Now?
Technicals
Kroger corrected lower in June but the decline was shallow which signals underlying strength. Further, the dip that followed their recent earnings report was promptly bought up and the upward momentum has picked up notably since then. Strong support for the stock is seen at $32.70 as the 20 and 50-day moving averages have converged towards each other at that price point. Kroger has not traded below it’s 50-day moving average on a sustained basis for nearly a year as buyers continue to accumulate this stock near that particular indicator. To the upside, the $34.50 price point might be a near-term hurdle as it was in May, but a break above it would clear the path for a retest of the March high near $37.
KR Chart July 2020
If you agree there’s further upside ahead for KR, 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 KR 7AUG20 30.5 Puts (KR20087P30.5)
Sell To Open KR 7AUG20 33.5 Puts (KR20087P33.5) for a credit of $0.87 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KR was trading at$33.50. 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 $1.30 per spread. Each contract would then yield $85.70 and your broker would charge a $300 maintenance fee, making your investment $214.30 ($300 – $85.70). If KR closes at any price above $33.50 on August 7, both options would expire worthless, and your return on the spread would be 40% (456% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 4, 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
Tags: Auto-Trade, Bearish Options Strategies, Bull Put Credit Spread, Bullish Options strategies, Calendar Spreads, Calls, Coronavirus, COVID-19, Credit Spreads, diagonal spreads, Earnings Option Strategy, implied volatility, KR, Kroger, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 29th, 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.
Check out the following two articles which have positive things to say about Dollar General – Top Consumer Staples Stocks for July 2020 and Record Retail Sales Lead Post-Lockdown Recovery: 5 Winners. The first article highlights DG as one of the fastest growing consumer staples stocks based on its earnings per share ratio. The second article discusses why DG is one of five stocks that stands to gain because of lockdown easing measures.
Technicals
There are a number of things that signal strength in DG. The stock was quick to recover from the Coronavirus inspired push lower in March, and it didn’t take long for it to break to a fresh record high. Compare this to the S&P 500 which has yet to fully recover its losses from March. Further, DG has been able to continue the upward momentum since breaking to a record high in April, and dips have been shallow since. There is an upward trend channel that has encompassed price action for nearly three months now and it points to strong support at $186.
DG Chart June 2020
If you agree there’s further upside ahead for DG, 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 DG 31JUL20 182.5 Puts (DG200731P182.5)
Sell To Open DG 31JUL20 187.5 Puts (DG200731P187.5) for a credit of $1.78 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when DG was trading near $189. 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 $1.30 per spread. Each contract would then yield $176.70 and your broker would charge a $500 maintenance fee, making your investment $323.30 ($500 – $176.70). If DG closes at any price above $187.5 on July 31, both options would expire worthless, and your return on the spread would be 55% (627% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 27, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Coronavirus, COVID-19, DG, Dollar General, implied volatility, Monthly Options, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Last Minute Strategy, Lazy Way Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 22nd, 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.
Netflix closed the past week out strong and looks ready to continue the upward momentum. Take a look at what the following analysts had to say about the stock – Netflix ‘Impervious’ To Coronavirus, Recession: Imperial Capital and Netflix Stock: An Easy 2x
Technicals
NFLX falls in a group of stocks that were quick to recover from the sell-off earlier in the year.The stock has been consolidating within a range since mid-April but the upward momentum seen over the last week or so, combined with a strong weekly close, tilts the odds towards an upward break, in line with the broader trend. To the downside, $416 is considered to be a major support level and has held the stock higher on a weekly close basis. This same level previously served as resistance, holding NFLX lower in 2018. A break above $455 would signal a bullish continuation that stands to attract more buyers and a potential acceleration in momentum.
NFLX Chart June 2020
If you agree there’s further upside ahead for NFLX, 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 NFLX 24JUL20 445 Puts (NFLX200724P445)
Sell To Open NFLX 24JUL20 450 Puts (NFLX200724P450) for a credit of $2.24 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $453. 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 $1.30 per spread. Each contract would then yield $222.70 and your broker would charge a $500 maintenance fee, making your investment $277.30 ($500 – $222.70). If NFLX closes at any price above $450 on July 24, both options would expire worthless, and your return on the spread would be 80% (913% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 20, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Coronavirus, COVID-19, implied volatility, Netflix, NFLX, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 15th, 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.
With the broader markets paring recent gains it appears to be a good time to be in precious metals and gold related stocks. Check out the following two articles which discuss the upside potential and a recent price upgrade – 3 Gold Stocks to Buy in June and Roth sees gold rallying to $2,200 by 2022, upgrades Kirkland Lake.
Technicals
From a technical perspective, KL has come into some notable support near $36 that buyers have defended thus far. There are a few more layers of support between $34.50 and $35 that originate from a weekly chart and technical traders may look to defend these levels in the event the stock dips a bit further. In addition to the strong downside support, a sharp rise in spot gold in the past week stands to keep related stocks well bid. Also, the popular gold miners ETF (GDX) made a notable bullish breakout last month and the technical outlook suggests this sector could be on the verge of a major bull run.
KL Chart June 2020
If you agree there’s further upside ahead for KL, 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 KL 17JUL20 30 Puts (KL200717P30)
Sell To Open KL 17JUL20 35 Puts (KL200717P35) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when KL was trading near $37. 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 $1.30 per spread. Each contract would then yield $131.70 and your broker would charge a $500 maintenance fee, making your investment $368.30 ($500 – $131.70). If KL closes at any price above $35 on July 17, both options would expire worthless, and your return on the spread would be 36% (411% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 13, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, gold, implied volatility, Kirkland Lake, KL, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 8th, 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.
With many tech stocks entering overbought territory, the appeal for REIT stocks is rising. Take a look at what the following two analysts had to say about Alexandria Real Estate – Why Should You Add Alexandria (ARE) Stock to Your Portfolio? and This is Why Alexandria Real Estate Equities (ARE) is a Great Dividend Stock.
Technicals
The technical outlook for ARE looks promising. The stock has rallied above its 200-day moving average after sellers stepped in to protect a rising trendline that is drawn from the March low. Further, ARE is seen attacking to a resistance level at $158 with strength and is on the verge of a bullish breakout. The moving average and trendline offer strong support for near-term dips.
ARE Chart June 2020
If you agree there’s further upside ahead for ARE, 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 ARE 17JUL20 150 Puts (ARE200717P150)
Sell To Open ARE 17JUL20 155 Puts (ARE200717P155) for a credit of $1.43 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ARE was trading near $159. 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 $1.30 per spread. Each contract would then yield $141.70 and your broker would charge a $500 maintenance fee, making your investment $358.30 ($500 – $141.70). If ARE closes at any price above $155 on July 17, both options would expire worthless, and your return on the spread would be 40% (374% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates June 6, 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
Tags: Alexandria Real Estate, ARE, Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Coronavirus, COVID-19, dividend, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, June 1st, 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.
Zoom Video was criticized a few months back for security and other concerns, but nevertheless, the stock continued higher. It looks even more appealing now as the company continues to gain market share and the prior concerns are no longer weighing on the company’s stock price. Several analysts share the same bullish outlook, here are two of them – Here’s Why Zoom Stock Has Been Soaring — and What to Expect Going Forward and Hedge Funds Have Never Been This Bullish On Zoom Video Communications, Inc. (ZM).
Technicals
From a technical perspective, ZM has been held higher by a rising trendline for most of the year. The stock tested this trendline in the past week and in a matter of days it was on the verge of breaking to an all-time high. The stock has been well bought on dips in general and the momentum is firm to the upside. The $180 level could prove to be a short-term hurdle but there is little reason to believe this stock will not break to all-time highs.
ZM Chart June 2020
If you agree there’s further upside ahead for ZM, 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 ZM 10JUL20 177.5 Puts (ZM200710P177.5)
Sell To Open ZM 10JUL20 180 Puts (ZM200710P180) for a credit of $1.33 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ZM was trading near $180. 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 $1.30 per spread. Each contract would then yield $131.70 and your broker would charge a $250 maintenance fee, making your investment $118.30 ($250 – $131.70). If ZM closes at any price above $180 on July 10, both options would expire worthless, and your return on the spread would be 111% (1266% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates May 30, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Coronavirus, COVID-19, implied volatility, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options, ZM, Zoom
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Monthly Options, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, May 25th, 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.
Several stocks have already broken to all-time highs and TTD looks poised to join this group. Check out the following two articles that both suggest that while TTD might be a bit expensive, it is a top pick among investors – The Trade Desk: Capturing A Revolutionary Trend and Investing in These 3 Top Stocks Could Double Your Money.
Technicals
TTD has shown strong upward momentum since the start of April. Dips have been shallow as buyers are quick to step in. Resistance near $324 has triggered a bit of pullback over the past few weeks which is to be expected considering it marks the previous all-time high. But the general lack of selling pressure from $324 is a sign of strength. Combined with the strong upward momentum as of late, a strong case can be made that the stock is headed to all-time highs. Technical support for the stock is seen at $280 which is considered significant as it acted as a major barrier over the summer last year.
TTD Chart May 2020
If you agree there’s further upside ahead for TTD, 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 TTD 26JUN20 305 Puts (TTD200626P305)
Sell To Open TTD 26JUN20 307.5 Puts (TTD200626P307.5) for a credit of $1.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when TTD was trading near $308. 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 $1.30 per spread. Each contract would then yield $116.70 and your broker would charge a $250 maintenance fee, making your investment $133.30 ($250 – $116.70). If TTD closes at any price above $307.5 on June 26, both options would expire worthless, and your return on the spread would be 88% (1004% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates May 23, 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
Tags: Auto-Trade, Bearish Options Strategies, Bullish Options strategies, implied volatility, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, Stocks vs. Stock Options, TastyWorks, Terry's Tips, thinkorswim, Trade Desk, TTD, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Weekly Options | No Comments »
Monday, May 18th, 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.
5G was a hot topic among investors ahead of the Coronavirus escalation. Now that the markets are picking up momentum again, companies that stand to gain from this technology are in the spotlight. Take a look at the following article which discusses how AMT stands to gain – 5G Is Still Coming Despite Covid-19. These Are the Stocks Set to Benefit First. Also, have a look at this article – 5G Will Be a Game-Changer for American Tower. It mentions that the stock may see some near-term weakness and that investors should take advantage of that. Interestingly, the stock has shown exactly that as it has pulled back from recent highs since the article was written.
Technicals
Two things stand out in the recent price action for AMT. First, it was able to rally to fresh record highs in April. Although it was brief, it shows strength and provides some confirmation that the uptrend remains intact. The second appeal is that the stock is currently testing its 200-day moving average. This particular indicator was well-respected in late 2019 and managed to hold the stock higher on several tests. It’s one of the more commonly watched moving averages and technical traders will be well aware of its presence.
AMT Chart May 2020
If you agree there’s further upside ahead for AMT, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least a little.
Buy To Open AMT 19JUN20 220 Puts (AMT200619P220)
Sell To Open AMT 19JUN20 230 Puts (AMT200619P230) for a credit of $3.48 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMT was trading near $230. 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 $1.30 per spread. Each contract would then yield $346.70 and your broker would charge a $1000 maintenance fee, making your investment $653.30 ($1000 – $346.70). If AMT closes at any price above $230 on June 19, both options would expire worthless, and your return on the spread would be 53% (605% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates May 16, 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
Tags: 5G, American Tower, AMT, Auto-Trade, Bearish Options Strategies, Bullish Options strategies, Coronavirus, COVID-19, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, May 11th, 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.
Solar Edge is up 75% from its lows in March and several analysts think the stock can continue higher. Check out the following articles which discuss the appeal – 5 Under-the-Radar Energy Stocks to Buy Now and Why Shares of SolarEdge Technologies Popped 43.3% in April.
Technicals
SEDG is showing strong upward momentum over the last month. There was a dip in the past week following earnings but the stock has recovered a bulk of the loss which is often a sign of strength. Since climbing above the 20-day moving average, buyers have been quick to step in on dips well ahead of the moving average. A horizontal level at $111 was a major hurdle early in the year and the weekly close above it further builds towards a bullish case.
SEDG Chart May 2020
If you agree there’s further upside ahead for SEDG, 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 SEDG 19JUN20 110 Puts (SEDG200619P110)
Sell To Open SEDG 19JUN20 115 Puts (SEDG200619P115) for a credit of $1.58 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when SEDG was trading near $118. 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 $1.30 per spread. Each contract would then yield $156.70 and your broker would charge a $500 maintenance fee, making your investment $343.30 ($500 – $156.70). If SEDG closes at any price above $115 on June 19, both options would expire worthless, and your return on the spread would be 46% (431% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates May 9, 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
Tags: Auto-Trade, Bullish Options strategies, Options Tutorial Program, Portfolio, Profit, Puts, Risk, SEDG, Solar Edge, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
Monday, May 4th, 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.
Several analysts have become increasingly bullish on Netflix after their most recent earnings report, here are two of them – 3 Reasons Why Netflix (NFLX) Is a Great Growth Stock and Netflix: A High-Growth Utility Despite Its High Valuation.
Technicals
Netflix is one of the few well-known companies that has broken to fresh record highs after the Coronavirus inspired drop in March. In the process of doing so, the stock has broken above an important price level at $385 that was a hurdle on three distinct attempts between late 2018 and March of this year. This technical breakout could lead to notable gains for the stock making the current pullback a buying opportunity. Buyers have already shown signs of stepping in at the 20-day moving average, further support comes at the breakout point of $385.
NFLX Chart May 2020
If you agree there’s further upside ahead for NFLX, 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 NFLX 12JUN20 410 Puts (NFLX200612P410)
Sell To Open NFLX 12JUN20 415 Puts (NFLX200612P415) for a credit of $2.40 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $415. 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 $1.30 per spread. Each contract would then yield $238.70 and your broker would charge a $500 maintenance fee, making your investment $261.30 ($500 – $238.70). If NFLX closes at any price above $415 on June 12, both options would expire worthless, and your return on the spread would be 91% (1038% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates May 2, 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
Tags: Auto-Trade, Bearish Options Strategies, Coronavirus, COVID-19, implied volatility, Netflix, NFLX, Options Tutorial Program, Portfolio, Profit, profits, Puts, Risk, SPY, Stocks vs. Stock Options, Terry's Tips, thinkorswim, Vertical Put Spread, Volatility, Weekly Options
Posted in 10K Strategies, Last Minute Strategy, Lazy Way Strategy, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »
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