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Will Growth Prospects Keep Mastercard (MA) Bid?
Mastercard has had some positive news coverage as of late, take a look at these two articles – Visa & Mastercard: Strong Growth and Dividend Hike Opportunities? And IBD Stock Of The Day Master Shows Strength – And Gives This Market Warning.
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Technicals
As outlined by one of the above articles, MA is currently facing it’s 200-Day moving average. Althought the article points out that the stock technically trades below it, there does not seem to be enough evidence of a clear break, or that bears have taken control. The stock has held above a horizontal level found near $193 found close to the moving average that has acted as both support and resistance on several occasions since May. Dips below this confluence area of support in the recent past have been short-lived, as seen on a monthly chart, where the stock has managed to hold above $197 on a monthly close basis.
*source Tradingview.com
If you agree there's further upside ahead for MA, 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 MA 25JAN18 190 Puts (MA190125P190)
Sell To Open MA 25JAN18 192.5 Puts (MA190125P192.5) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when MA was trading near $195. 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 $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers). Each contract would then yield $107.50 and your broker would charge a $250 maintenance fee, making your investment $142.50 ($250 – $107.50). If MA closes at any price above $192.5 on January 25, both options would expire worthless, and your return on the spread would be 75% (702% 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?
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 Seth@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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