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.
Consider Ulta Beauty (ULTA) Following the Technical Break
Several analysts are optimistic regarding the outlook for Ulta Beauty stock, here are two of them – Ulta Beauty Up 19% in 3 Months on Strategic Efforts and David Rolfe Comments on Ulta Beauty.
ULTA made a notable technical break in early September by clearing above horizontal resistance at $260 that had held it lower throughout the summer. The stock has corrected lower since hitting highs around 290 which may offer an attractive entry point. The recent decline has not accompanied much downside momentum, which is especially significant when considering overal market conditions, suggesting a correction is taking place rather than a turn in the near-term trend.
ULTA Chart October 2018
If you agree there’s further upside ahead for ULTA, 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 ULTA 16NOV18 270 Puts (ULTA181116P270)
Sell To Open ULTA 16NOV18 275 Puts (ULTA181116P275) for a credit of $2.18 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when ULTA was trading near $276. 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 $215.50 and your broker would charge a $500 maintenance fee, making your investment $284.50 ($500 – $215.50). If ULTA closes at any price above $275 on November 16, both options would expire worthless, and your return on the spread would be 76% (867% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates October 11, 2018
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.
Click Here For Original Source Of The Article
New York Times Bestseller What are the consequences if the people given control over our government have no idea how it works?
"The election happened," remembers Elizabeth Sherwood-Randall, then deputy secretary o... read more
Ray Dalio, one of the world's most successful investors and entrepreneurs, shares the unconventional principles that he's developed, refined, and used over the past 40 years to create unique results in both life and business - and which any p... read more
A game-changing approach to marketing, sales, and advertising, by bestselling author and renowned business thinker Seth GodinSeth Godin has taught and inspired millions of entrepreneurs, marketers, leaders, and fans from all walks of life, vi... read more
A NEW YORK TIMES, WALL STREET JOURNAL, AND USA TODAY BESTSELLERThe legendary investor shows how to identify and master the cycles that govern the markets.We all know markets rise and fall, but when should you pull out, and when should ... read more
Very few careers can offer you the freedom, flexibility and income that day trading does. As a day trader, you can live and work anywhere in the world. You can decide when to work and when not to work. You only answer to yours... read more
This #1 New York Times best-selling guide to decluttering your home from Japanese cleaning consultant Marie Kondo takes readers step-by-step through her revolutionary KonMari Method for simplifying, organizing, and storing.Despite constant ef... read more
The International Advantage is a must read for any international student (F1 of J1 visa) who dreams about a securing a job in the U.S, or is serious about pursuing a global career.
NEW YORK TIMES BESTSELLER“After five decades of magisterial output, Doris Kearns Goodwin leads the league of presidential historians. Insight is her imprint.”—USA TODAY“A book like Leadership should help us raise our expectations of our natio... read more
A game-changing approach to marketing, sales, and advertising, by best-selling author and renowned business thinker Seth Godin.
Seth Godin has taught and inspired millions of entrepreneurs, marketers, leaders, and fans from all walks of life,... read more
Aristotle and Nike got it right – GREATNESS is what we humans DO – when given the challenge, the encouragement, the environment, and the opportunity.At some point in this postmodern life, individual greatness has lost its appeal for many of u... read more