Dear Friend,

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

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.

Terry

Facebook (FB): Time to Buy The Dip?

Several analysts are expecting Facebook stock to continue higher, here are two of them – Facebook Inc Stock Can Still Deliver Value, Event at These Levels and Three stocks to buy on recent weakness.

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Technicals

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.

*source Tradingview.com

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).

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

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

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

Happy trading,

Terry

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Any questions?   I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts. seth@terrystips.com

You can see every trade made in the actual option portfolios conducted at Terry’s Tips and learn all about the wonderful world of options by subscribing here.   Why wait any longer to make this important investment in yourself?

I look forward to having you on board, and to prospering with you.

Terry
 

    

 Open tastyworks account

Who Will Emerge as the Largest Marijuana Grower in Canada?

As of July 2018, Marijuana will be fully legal in Canada and cannabis stocks are starting to fire back up as a result. But which will emerge as the giants of industry and which will be flash in the pan stocks that are left behind in the bubble? Read this special report to learn more.

It is often said that options are to stock trading as chess is to checkers. I was looking to find the chess master amongst the checker's champs, and Terry is the one. Looking for the very smart yet understandable way to trade options? Look no further.

~ Phil

Thank you again for being a part of the Terry's Tips newsletter. If you are interested in signing up as an Insider, visit Terry's Tips today for details.

Sincerely,
Dr. Terry Allen
Terry's Tips