Has Adobe (ADBE) Reverted to a Bullish Trend?
With the markets gaining upward momentum, several analysts have had good things to say about Adobe. Here is what the IBD thinks about the stock - Is Adobe Stock A Buy Right Now? Here's What Earnings, ADBE Chart Show. Also take a look at the following article which makes a case that the company is in a good position to handle the impact of the Coronavirus - Adobe: A Resilient Software Giant
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Technicals
The main technical development for ADBE as of late is that it has comfortably regained its 200-day moving average. This particular indicator has drawn buyers in the past and dips below it have generally been short-lived in the recent past. The stock appears to be building a base for its next move higher. Further, the monthly candle for March signals that there was strong buying after the dip below $300. Over the near-term, the $327 price point has proven to be a small hurdle. A break above can lead to a rally towards $360 which is a significant technical area for the stock.
*source Tradingview.com
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 a little bit.
Buy To Open ADBE 15MAY20 315 Puts (ADBE200515P315)
Sell To Open ADBE 15MAY20 320 Puts (ADBE200515P320) for a credit of $1.60 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ADBE was trading near $319. 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 $158.70 and your broker would charge a $500 maintenance fee, making your investment $341.30 ($500 – $158.70). If ADBE closes at any price above $320 on May 15, both options would expire worthless, and your return on the spread would be 46% (525% annualized).
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The coronavirus story is only getting worse. At the moment, Over 90,000 people have been infected and more than 3,500 have already died around the world. Unfortunately, those numbers may only increase without vaccines. However, there are companies racing to meet that need. We've put together a list of the hottest virus stocks at the moment, which can be viewed in our special report.
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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? Email Colin@terrystips.com
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Even better, you can become a Terry’s Tips Insider, and receive all our educational reports and materials absolutely free by opening a new account at the best options broker around - thinkorswim. If you open an account with our link, they will give you 60 days of free trading or up to $600, the same deals they give to everyone who opens an account with them. You must use this link to sign up - open thinkorswim account – and once you have funded your account with at least $3500, email Colin@TerrysTips.com and let him know that you have done it, and this is what he will do – sign you for our Premium Service package ($119.95 value plus an extra 4 months of our Premium Service, valued at another $190.80). You get $300.65 worth of services without paying us one penny.
I look forward to having you on board, and to prospering with you.
Terry
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