Option trade ideas

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Option Trading Ideas.

Today's Option Trading Ideas From the Top Option Sources:

When you are looking for option trading ideas , sometimes it is best to follow what the smart money is doing. Here are some feeds from a variety option trading sites. They generally look for and report unusual trading volume on the options on certain stocks. Some look for very large purchases that exceed the average daily volume; some look for changes in the ratio of call options to put options being traded on a certain stock. It is best to dip your toe slowly in these waters and just buy 2 or 3 contracts to ride along until you see what works best for you.

Call and Put Trading Ideas.

The stocks below have the highest ratio of calls to puts for a Bullish signal; and the highest ration of puts to calls for a Bearish signal:

Call Option, Put Option, Stock Option Trading Ideas.

Stock and Option Trade Ideas.

Regular readers of My Trader’s Journal know I focus on selling naked puts and even covered calls when needed. This is where my option selling ideas start. As I read various articles from magazines, other blogs, newspapers and traditional Web sites I write down the tickers to make sure I go back to research them later. I probably trade on less than 5% of the stocks I start researching. This page will let you see some of my notes while it gives me a place to store my notes in a somewhat more organized fashion. Right now I use a collection of torn out pages from print articles, Post-It notes and scraps of paper such as used envelopes that pile up on my desk at work and home. This will give me one place to stay organized a little better, especially for those days/weeks when I can’t find something I want to trade on, I’ll be able to return to this page and give some old ideas a second chance.

Here’s my list as I start, details will fill in as time passes:

AA – Alcoa is Aluminum heavy and Aluminum is priced in dollars, Strong dollar equals lower aluminum price and lower AA price. Weaker economy kills AA. AAPL – It’s Apple, good in strong economic times, drops quickly otherswise ACOR – Pharma play on Multiple Sclerosis + makes Zanaflex AMAT – Previous trade AMSC – Smart Money Magazine, March 08, environmently friendly products and services CHE – Jim Cramer/Mad Money DD – Previous trade DE – Barron’s, touted for strong dividends DWA – Previous trade. FCX – Moves with price of copper. Strong dollar equals lower copper price and lower FXC price. Weaker economy kills FCX. FWLT – Makes big moves up or down in line with the economy. Weaker economy kills FWLT. GLW – Barron’s, good earnings, but the stock hasn’t moved much IKBR – Simple Trading System blog, quoting Forbes article ONXX – Barron’s 6/23/08 – risky pharma play PBR – Barron’s, from social stock picker sites summary PGC – Jim Cramer/Mad Money PHG – Smart Money Magazine, March 08, environmently friendly products and services SLB – Oil play SPWR – Smart Money Magazine, March 08, environmently friendly products and services – great premiums which go with the high risk. TDW – Barron’s, touted for strong dividends – Moves up when oil prices rise VE – Smart Money Magazine, March 08, environmently friendly products and services VLO – Oil play, not always up when oil is up due to refining costs ZOLT – Smart Money Magazine, March 08, environmently friendly products and services – great premiums which go with the high risk.

$VIX. X – CBOE Market Volatility Index $VXN. X – CBOE NASDAQ Market Volatility Index $VIO. X – CBOE Oil Reduc Val Index – Not optionable yet , but expected to be eventually, so this is a placeholder.

I’m keeping the comments section turned off since this is a single page versus a new post I’ll be writing. As trade ideas change, comments would become outdated. Please comment on the most recent post if you have something to add for all to see or you can always me – alex AT mytradersjournal DOT com .

HAIN – The Hain Celestial Group, Inc.

Trade idea: Buy to open the September 15th 39x/37x vertical put spread currently trading at about $0.50.

HAIN reported earnings last week which topped estimates and initially sent the stock higher by nearly 6% before it reversed to close down 1.4%. JPMorgan chimed in on the report and said they are somewhat skeptical on the company’s guidance. With the reversal lower after earnings, it broke through the previous week’s lows after breaking through the highs as well. Because of the sharp reversal and weak close just off the lows for the week, price action remains bearish and continues to signal further downside in the near term.

With confirmation below last week’s lows of $39.14 this week, it will signal further downside to the next key support level at $37 – $37.25 within the next 1-2 weeks. It could test it by the end of this week, although keep in mind this week is a shortened 4 day trading week.

The trade idea: buy to open the September 15th 39x/37x vertical put spread currently trading at about $0.50 only if there is confirmation below $39.14 this week .

LOW – Lowe’s Companies, Inc.

Trade idea: Buy to open the July 21st 75x puts currently trading at about $0.85.

LOW reported earnings last week and unlike its peer Home Depot (HD), the company missed estimates sending the stock lower by nearly 5%. Although it likely won’t have an impact on the stock, the company does have an upcoming shareholder meeting this Friday, June 2nd, at 10:00 AM EST.

From a technical perspective the stock failed to show any continuation last week after nearly filling the gap from its earnings miss on a bounce. It in fact continued lower from that bounce to new lows for the month today. Now going into June, monthly price action is very bearish and signaling further downside next month. With confirmation below $78.10 in June the next key support level to watch will be at $74.75 – $75.

The trade idea: Buy to open the July 21st 75x puts currently trading at about $0.85 only if there is confirmation below $78.10 next month .

Archive for the ‘Stock Option Trading Idea Of The Week’ Category.

Floor & Decor Holdings (FND) Is Set To Grow.

Monday, December 11th, 2017.

This week we are featuring 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 10 actual option portfolios carried out by Terry’s Tips for its paying subscribers have gained an average of 108% for 2017. This is down a little from a few weeks ago because many of the tech stocks that we trade options on have fallen over the past few weeks. We are still pleased with the composite results, however. (One of our newest portfolios adds the Trading Idea of the Week that we send out to you each week to its holdings).

Floor & Decor Holdings (FND) Is Set To Grow.

The technical outlook for FND is also positive as the stock broke above a significant horizontal level at $42.43 in the past week. As a result, the stock printed the highest weekly close to date. The technical break signals the potential for a breakout and dips are likely to be bought ahead of the horizontal level.

FND Chart December 2017.

If you agree there’s further upside ahead for Floor & Décor Holdings, consider this trade which is a bet that the stock will continue to advance at least a little over the next six weeks.

Buy To Open FND 19Jan18 40 Puts (FND180118P40)

Sell To Open FND 19Jan18 45 Puts (FND180118P45) for a credit of $1.58 (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 $156 and your broker would charge a $500 maintenance fee, making your investment $344 ($500 – $156). If FND closes at any price above $45 on January 19, 2018, both options would expire worthless, and your return on the spread would be 45% (414% annualized).

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

IBD Underlying Updates December 7, 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.

Will Essent Group (ESNT) Continue the Momentum?

Tuesday, December 5th, 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 take advantage of the momentum.

Will Essent Group (ESNT) Continue the Momentum?

ESNT has recently seen a pickup of upside momentum after a consolidating mostly sideways from early in the year. The stock broke to fresh record highs late last month and a correction in the second half of last week ended with a bullish engulfing candle on a daily chart, suggestion a continuation of the predominant bullish trend.

ESNT Chart December 2017.

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

Buy To Open ESNT 19Jan18 40 Puts (ESNT180119P040)

Sell To Open ESNT 19Jan18 45 Puts (ESNT180119P045) for a credit of $1.38 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when EA 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 $136 and your broker would charge a $500 maintenance fee, making your investment $364 ($500 – $136). If ESNT closes at any price above $45 on January 18, 2018, both options would expire worthless, and your return on the spread would be 37% (296% annualized).

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

IBD Underlying Updates December 1, 2017.

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

Facebook (FB): Time to Buy The Dip?

Monday, November 20th, 2017.

The last 12 ideas which we have published here which have expired resulted in 11 gains averaging 39% (including the loss which was only 10% on one of the spreads). If you had invested the same amount in each of the 12 ideas, you would have made 468% on that amount. Of course, we can’t promise that future results will be this great.

Facebook (FB): Time to Buy The Dip?

FB broke above horizontal resistance from highs posted in July at $175 to hit fresh record highs at the start of the month. The stock has since declined slightly in a low momentum correction. The broken horizontal level now resides near a rising trendline that originates from a low printed at the end of 2016 to create a strong confluence of support to the downside.

FB Chart November 2017.

If you agree there’s further upside ahead for Facebook, consider this trade which is a bet that the stock will continue to advance at least a little over the next six weeks.

Buy To Open FB 15Dec17 175 Puts (FB171215P175)

Sell To Open FB 15Dec17 180 Puts (FB171215P180) for a credit of $1.94 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FB was trading at $179. 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 $192 and your broker would charge a $500 maintenance fee, making your investment $308 ($500 – $192). If FB closes at any price above $180 on December 15, 2017, both options would expire worthless, and your return on the spread would be 62% (711% annualized).

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

IBD Underlying Updates November 16, 2017.

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

Coherent Inc. (COHR) Jumps After Earnings Beat, Is There More Upside Ahead?

Tuesday, November 14th, 2017.

This week we are featuring another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our portfolios to identify stocks with momentum and place spreads that profit if the momentum continues, at least a little.

I would also like to include a table which reviews how the previous 12 Trading Idea of the Week selections have worked out in the real world. We have had an exceptionally good record.

Coherent Inc. (COHR) Jumps After Earnings Beat, Is There More Upside Ahead?

Before we discuss this week’s trading idea, I would like to review the past 12 ideas we have published here. Each of these ideas was first distributed to Terry’s Tips ’ paid subscribers in our weekly Saturday Report , and then on Monday or Tuesday, to the free newsletter subscribers such as you. Here are the results:

Trading Idea of the week Summary Chart November 2017.

The expiration prices for the 3 spreads which expire next Friday are today’s prices. All of them are safely above the max gain price for the spread.

The only losing trade would have been the BABA one which was a minor loss. The stock closed at $.85 below the max gain price and we had collected $.75 from the spread. Presumably, rather than accept this small loss, we would have rolled over the vertical credit spread to a future date. If we had, it would now look pretty good because BABA closed yesterday at $186.41, well above the max gain 177 strike.

The average gain for the 12 spreads (including the loss) was 39%. If you had risked the same amount on 12 trades that averaged a 39% gain, you would have picked up 468% on your original investment. While these results are a extremely encouraging, we must recognize that the past few months have been ones of generally higher stock prices across the board. Future results might not be this great.

Now, back to our Trading Idea of the Week :

Several analysts have expressed their bullish outlook towards Coherent Inc. following their recent earnings report. Here are two of them – Coherent price target raised to $330 from $270 at Needham and Coherent Inc. can’t be more hot. Just reaches record high.

From a technical perspective, COHR had been consolidating mostly sideways for nearly six months ahead of last week’s earnings report. The earnings beat triggered a gap higher for a range break and the stock held gains to close the week out at record highs. The range break suggests the broader bullish trend has resumed.

COHR Chart November 2017.

If you agree there’s further upside ahead for Coherent Inc., consider this trade which is a bet that the stock will continue to advance at least a little over the next five weeks.

Buy To Open COHR 15Dec17 305 Puts (COHR171215P305)

Sell To Open COHR 15Dec17 310 Puts (COHR171215P310) for a credit of $2.53 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when COHR was trading near $309. 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 $251 and your broker would charge a $500 maintenance fee, making your investment $249 ($500 – $251). If COHR closes at any price above $310 on December 15, 2017, both options would expire worthless, and your return on the spread would be 101% (1150% annualized).

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

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

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

Monday, November 6th, 2017.

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?

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.

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.

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

Centene Corp (CNC) Poised To Break $100.

Monday, October 30th, 2017.

This week we are featuring another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our portfolios to identify stocks with upward momentum and place spreads that stand to profit if the momentum continues, at least a little.

Just an update – the composite average gain for our 10 Terry’s Tips actual options portfolios has now reached 102% for 2017 (after paying all commissions, of course), and we expect some fireworks this week in our two portfolios which trade FB and MA options as both companies announce earnings after the close on Wednesday.

Centene Corp (CNC) Poised To Break $100.

From a technical perspective, a rising trendline is in play that dates back to a low posted in late 2016. Buyer’s protected the trendline earlier this month on a momentum driven decline which reaffirms that it is widely watched and respected.

CNC Chart October 2017.

If you agree there’s further upside ahead for Centene Corporation, consider this trade which is a bet that the stock will continue to advance at least a little over the next seven weeks.

Buy To Open CNC 5Dec17 92.50 Puts (CNC171215P92500)

Sell To Open CNC 5Dec17 95.00 Puts (CNC171215P95000) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CNC was trading near $94.50. 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 $116 and your broker would charge a $250 maintenance fee, making your investment $134 ($250 – $116). If CNC closes at any price above $95 on December 15, 2017, both options would expire worthless, and your return on the spread would be 87% (1264% annualized).

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

IBD Underlying Updates October 26, 2017.

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

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?

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.

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.

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

Consider Five Below Inc (FIVE) After The Bullish Technical Breakout.

Monday, October 16th, 2017.

This week we are featuring 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 momentum.

The composite average gain for the 10 portfolios carried out for Terry’s Tips paying subscribers has now reached 95.2% for 2017. Isn’t it time for you to come on board and learn exactly how our options strategies have been able to compile this kind of record so consistently this year?

Consider Five Below Inc (FIVE) After The Bullish Technical Breakout.

Several analysts have been praising Five Below Inc’s business model and see further upside in the stock price. Here are two of them – Five Below Might Offer 15% Upside Potential and Amazon Who? This Fast-Growing, Teen-Focused Retailer Breaks Out.

Recently, there has been a technical breakout in FIVE as it has scaled above the 2016 and 2017 highs which were in close proximity of each other around the $53 price point. The stock has also climbed above a horizontal level at $54.77 which was major resistance in 2013, in doing so, the stock briefly traded at record levels. There has been a retracement in the past week which could be offering an attractive entry point.

FIVE Chart October 2017.

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

Buy To Open FIVE 17Nov17 50 Puts (FIVE171117P50)

Sell To Open FIVE 17Nov17 55 Puts (FIVE171117P55) for a credit of $1.28 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when FIVE was trading near $55. 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 FIVE closes at any price above $55 on November 17, 2017, 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 October 12, 2017.

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

Will the Nvidia (NVDA) Bull Run Continue?

Monday, October 9th, 2017.

This week we are discussing another of the Investor’s Business Daily (IBD) Top 50 List companies. We use this list in one of our portfolios to identify stocks with upward momentum and place spreads which will profit if the upward momentum continues for about four weeks. Actually, the stock can even fall a little for the maxium gain to be made on these spreads.

The actual portfolios carried out for Terry’s Tips ’s paying subscribers had another banner week, gaining an average of 4.7% while the market (SPY) rose 1.2%. Our 10 portfolios have now gained 86.7% so far in 2017. Options clearly can deliver extraordinary gains if they are set up properly.

Will the Nvidia (NVDA) Bull Run Continue?

From a technical perspective, NVDA has been rallying in a rising trend channel since early July. There was a correction that took place late last month, however, the 20-day moving average as well as the lower bound of the rising channel held the stock price higher and continues to offer downside support.

NVDA Chart October 2017.

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

Buy To Open NVDA 3Nov17 177.50 Puts (NVDA171103P17750)

Sell To Open NVDA 3Nov17 180.00 Puts (NVDA171103P18000) for a credit of $1.10 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $181. 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 $108 and your broker would charge a $250 maintenance fee, making your investment $142 ($250 – $108). If NVDA closes at any price above $180 on November 3, 2017, both options would expire worthless, and your return on the spread would be 76% (1110% annualized).

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

IBD Underlying Updates October 5, 2017.

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

Earnings Growth To Fuel Further Momentum For Red Hat (RHT)

Monday, October 2nd, 2017.

This week we are featuring a recent addition to the Investor’s Business Daily (IBD) Top 50 List of companies. We use this list in one of our portfolios to spot outperforming stocks and place spreads which will profit if the upward momentum continues. Actually, the stock can even fall a little for the maximum gain to be realized on these spreads.

The 10 Terry’s Tips option portfolios enjoyed another stellar week last week, gaining an average of 1.2%, and making the ytd number a whopping 78% for all the portfolios combined. This is over 7 times as great as the 2017 results for the market (SPY) which is up about 11%.

Earnings Growth To Fuel Further Momentum For Red Hat (RHT)

Red Hat reported above-consensus earnings in the past week and several analysts have refreshed their upside targets since. Here are two of them – Red Hat PT raised to $128 at BMO Capital and Red Hat PT Raised to $117 at JPMorgan Following 2Q.

Red Hat’s earnings report triggered a push higher above a notable horizontal level at $108.04 that held the stock price lower on several attempts throughout the month prior to the report. RHT also regained the 20-period daily moving average on the back of the same surge and hit fresh 52-week highs. The horizontal level and the moving average fall in close proximity to each other, offering a strong confluence of downside support.

RHT Chart October 2017.

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

Buy To Open RHT 17Nov17 105 Puts (RHT171117P105)

Sell To Open RHT 17Nov17 110 Puts (RHT171117P110) for a credit of $1.45 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when RHT was trading near $111. 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 $143 and your broker would charge a $500 maintenance fee, making your investment $357 ($500 – $143). If RHT closes at any price above $110 on November 17, 2017, both options would expire worthless, and your return on the spread would be 40% (325% annualized).

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

IBD Underlying Updates September 28, 2017.

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

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

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

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.

thinkorswim, Division of TD AMERITRADE, Inc. and Terry’s Tips are separate, unaffiliated companies and are not responsible for each other's services and products.

tastyworks, Inc. has entered into a Marketing Agreement with Terry’s Tips (“Marketing Agent”) whereby tastyworks pays compensation to Marketing Agent to recommend tastyworks’ brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastyworks and/or any of its affiliated companies. Neither tastyworks nor any of its affiliated companies is responsible for the privacy practices of Marketing Agent or this website. tastyworks does not warrant the accuracy or content of the products or services offered by Marketing Agent or this website.

tastyworks, Inc. and Terry’s Tips are separate, unaffiliated companies and are not responsible for each other’s services and products. Options are not suitable for all investors as the special risks inherent to options trading my expose investors to potentially rapid and substantial losses. Options trading in a tastyworks account is subject to tastyworks’ review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.

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