Category Archives: Uncategorized
Netflix (NFLX) Regains Upward Momentum
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.
NFLX rallied to a six-week high in the past week and shows the potential to continue higher. The following two articles outline reasons why the stock could continue the momentum – Hooking Up or Locking Down, Netflix Poised to Win Either Way, and Netflix (NFLX) Back in Rally Mode After Brief Correction.
Technicals
NFLX has rallied above a horizontal level near $510, which hints that the correction from mid-July to mid-August may have ended. The same level contained an earlier range and may now act as support on near-term declines. There is further support from the lower boundary of a trend channel that has encompassed the price action since March.
NFLX Chart August 2020
If you agree there’s further upside ahead for NFLX, consider this trade, which relies on the stock remaining above the 520 level during the next five weeks:
Buy To Open NFLX 2OCT20 515 Puts (NFLX201002P515)
Sell To Open NFLX 2OCT20 520 Puts (NFLX201002P520) for a credit of $3.30 (selling a vertical)
This credit is $0.02 less than the mid-point of the option spread when NFLX was trading near $524. 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 $328.70. This reduces your buying power by $500 and makes your investment $171.30 ($500 – $328.70). If NFLX closes above $520 on October 2, both options will expire worthless, and your return on the spread would be 192% ($328.70 / $171.30), or 2,190% annualized.
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 29, 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
Alibaba (BABA) Looks Appealing After Strong First Quarter Results
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 expect more upside for BABA’s stock price. Check out what the following two reports had to say about it – Post-Earnings Alibaba (BABA) Opportunity and Will Alibaba Be the Next Trillion-Dollar Giant?
Technicals
From a technical perspective, BABA has been consolidating within a triangle for the better part of two months. More specifically, the stock is holding in an ascending triangle, a pattern that is bullish. The stock has not yet broken higher from it, but the recent upward momentum hints that it is only a matter of time. Typically, when a consolidation pattern like this is broken, the stock sees a renewal of upward momentum.
BABA Chart August 2020
If you agree there’s further upside ahead for BABA, consider this trade, which is a bet that the stock will continue to advance over the next five weeks, or at least not decline by much.
Buy To Open BABA 25SEP20 262.5 Puts (BABA200925P262.5)
Sell To Open BABA 25SEP20 265 Puts (BABA200925P265) for a credit of $1.23 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when BABA was trading near $266. 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 $121.70 while your buying power would be reduced by $250, making your net investment $128.30 ($250 – $121.70). If BABA closes at any price above $265 on September 25, both options would expire worthless, and your return on the spread would be 95% (121.70/128.30), or 1,084% annualized.
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 22, 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
Will Bristol-Myers Squibb (BMY) Continue the Upward Momentum?
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.
BMY is up nearly 40% from its low in March and several analysts expect it will continue to push higher. Check out the following article that discusses a potential 10% upside – Analysts Are Bullish on Top Healthcare Stocks: Pfenex (PFNX), Bristol Myers (BMY). Also, take a look at why BMY might be appealing to growth investors – 3 Reasons Why Growth Investors Shouldn’t Overlook Bristol Myers (BMY).
Technicals
After a correction lower that started in May, BMY is showing signs that the uptrend has resumed. The stock has rallied above its 200-day moving average as well as a horizontal price point at $60. The moving average and horizontal level are now seen as strong support on the downside. Ahead of it, an additional support level is seen at $61.75. BMY is outperforming several of the stocks on the IBD Top 50 list in the month thus far. The higher time-frame charts for this stock point to renewed upward momentum while many of the other stocks on the list have started to move sideways.
BMY Chart August 2020
If you agree there’s further upside ahead for BMY, consider this trade is based on the stock continuing its advance over the next five weeks, or at least not declining very much.
Buy To Open BMY 18SEP20 60 Puts (BMY20918P60)
Sell To Open BMY 18SEP20 62.5 Puts (BMY20918P62.5) for a credit of $0.68 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when BMY was trading near $63. 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 $66.70 and your broker would charge a $250 maintenance fee, making your investment $183.30 ($250 – $66.70). If BMY closes above $62.5 on September 18, 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 August 15, 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
Should You Buy Amazon (AMZN) Following Its Earnings Report?
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.
Amazon had a strong quarter and the following two articles outline the earnings report and why the stock may head higher from here – Amazon (AMZN) Q2 Earnings and Revenues Top Estimates and Why Amazon Stock Climbed 14% Last Month.
Technicals
From a technical perspective, AMZN was held lower by a horizontal resistance level near $3250 on the rally that followed the recent earnings report. However, from a broader perspective, the stock has been firmly bid from a rising trendline that originates back to a low posted in March. Considering how long this trendline has been in place, and the long-term trend, the resistance at $3250 does not appear to be a big hurdle and it may only be a matter of time before this stock is trading at fresh all-time highs.
AMZN Chart August 2020
If you agree there’s further upside ahead for AMZN, 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 AMZN 11SEP20 3160 Puts (AMZN200811P3160)
Sell To Open AMZN 11SEP20 3165 Puts (AMZN200811P3165) for a credit of $2.40 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $3165. 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 AMZN closes at any price above $3165 on September 11, 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 August 8, 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
The Dip in Microsoft (MSFT) Offers a Buying Opportunity
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.
Microsoft has dipped lower over the past few weeks, but several analysts think the broader outlook calls for more upside. Check out the following two articles which discuss the recent earnings report and how the pros outweigh the cons for MSFT investors – Microsoft revenue grew 13% despite coronavirus and Should You Buy Microsoft (MSFT) Stock?
Technicals
From a technical perspective, there are a few things that make MSFT attractive at current prices. First, there is a trendline in place that extends back to lows posted in April and the stock is seen bouncing from it. Further, this same trendline is intersecting with the $200 level which is seen as a support level. In addition to support confluence, there is a candlestick pattern on a weekly chart that suggests a bullish reversal may be taking place.
MSFT Chart August 2020
If you agree there’s further upside ahead for MSFT, 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 MSFT 4SEPT20 202.5 Puts (MSFT20084P202.5)
Sell To Open MSFT 4SEPT20 205 Puts (MSFT20084P205) for a credit of $1.08 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MSFT was trading near $205. 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 $106.70 and your broker would charge a $250 maintenance fee, making your investment $143.30 ($250 – $106.70). If MSFT closes at any price above $205 on September 4, both options would expire worthless, and your return on the spread would be 74% (844% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates August 1, 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
Can Chegg (CHGG) Continue the Upward Rally?
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 following two articles outline several reasons why Chegg (CHGG) could see some more upside: Does Chegg (NYSE:CHGG) Have The Makings Of A Multi-Bagger? and Chegg (CHGG) Upgraded to Strong Buy: Here’s What You Should Know
Technicals
From a technical perspective, CHGG is seen dipping lower to test support from a rising trend channel that has encompassed price action since the middle of last month. Further support is seen just below the trend channel at the $70 price point. What’s most appealing is that the stock has been outperforming the broader markets in recent times and has held ground while other stocks have eased back. A minor hurdle is seen near $75. If the stock is able to clear it, the odds for a new record high appear favorable.
CHGG Chart July 2020
If you agree there’s further upside ahead for CHGG, 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 CHGG 21AUG20 65 Puts (CHGG200821P65)
Sell To Open CHGG 21AUG20 70 Puts (CHGG200821P70) for a credit of $1.68 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when CHGG was trading near $73. 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 $166.70 and your broker would charge a $500 maintenance fee, making your investment $333.30 ($500 – $166.70). If CHGG closes at any price above $70 on August 21, both options would expire worthless, and your return on the spread would be 50% (730% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 25, 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
Should You Buy the Dip in Adobe (ADBE)?
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.
Adobe has been a long-term outperformer and the recent dips could offer an attractive entry point for buyers. Check out what the following two analysts have to say about the stock – Here’s Why Adobe (ADBE) Stock Could be a Solid ‘Buy’ in Today’s Market and Is Adobe Stock A Buy Right Now? Here’s What Earnings, ADBE Chart Show.
Technicals
Adobe has corrected lower in the past week and is seen testing a confluence of support. The support area consists of a horizontal level at $423 that previously acted as support in late June as well as the lower bound of a trend channel that has encompassed price action since April. The earlier downside momentum has already subsided which signals that buyers are defending this area. While above $423, the stock has the potential to continue higher, in line with the trend from the low in March.
ADBE Chart July 2020
If you agree there’s further upside ahead for ADBE, 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 ADBE 21AUG20 425 Puts (ADBE200821P425)
Sell To Open ADBE 21AUG20 430 Puts (ADBE200821P430) for a credit of $2.15 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $432. 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 $213.70 and your broker would charge a $500 maintenance fee, making your investment $286.30 ($500 – $213.70). If ADBE closes at any price above $430 on August 21, both options would expire worthless, and your return on the spread would be 75% (855% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 18, 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 (AMD) is Poised for a Move to the Upside
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 expect AMD to continue pushing higher. The following two articles provide offer compelling reasons as to why – Is Advanced Micro Devices Finally Ready to Break Out? and 3 Reasons AMD Stock Is a Buy Right Now.
Technicals
AMD has been consolidating sideways since mid-April and appears poised for an upside breakout. Buyers have been defending the lower end of the range near support at $50 while sellers have capped gains at a trendline that originates from the peak posted in February. Consolidations typically break in the direction of the broader trend and this particular stock has had a strong bullish trend for more than four years. Unlike other stocks that are appealing to investors right now, AMD does not show signs of being overbought on a daily timeframe which reduces the chances of a sharp near-term retracement. In terms of support, the 20 and 50-day moving averages have converged towards each other to offer a floor at $53.50.
AMD Chart July 2020
If you agree there’s further upside ahead for AMD, 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 AMD 14AUG20 50 Puts (AMD200814P50)
Sell To Open AMD 14AUG20 55 Puts (AMD200814P55) for a credit of $2.01 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when AMD was trading near $56. 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 $199.70 and your broker would charge a $500 maintenance fee, making your investment $300.30 ($500 – $199.70). If AMD closes at any price above $55 on August 14, both options would expire worthless, and your return on the spread would be 67% (764% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates July 11, 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
Kroger (KR) Shows Renewed Upward Momentum Following an Earnings-Inspired Dip
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
Dollar General (DG) Stands to Benefit from Post Lockdown Sales Boost
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
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