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.
Netflix(NFLX) Pulls Back After Earnings, Is It a Buy?
Recent hikes in the price target for Netflix stock among analysts suggest there is further upside. Stifel Nicolaus has raised their target from $345 from $325 and Raymond James increased targets from $290 to $330.
NFLX has pulled back since its earnings report but price action over the past few days suggest some exhaustion as a doji candlestick pattern has printed and the stock price has edged higher since. This pattern was established at the 50-day moving average which remains a key indicator to the downside. Further support is seen slightly below it in the form of a rising trendline.
NFLX Chart April 2018
If you agree there’s further upside ahead for NFLX, 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 NFLX 01JUN18 307.5 Puts (NFLX180601P307.5)
Sell To Open NFLX 01JUN18 310 Puts (NFLX180601P310) for a credit of $1.08 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $312. 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 $105.50 and your broker would charge a $250 maintenance fee, making your investment $144.50 ($250 – $105.50). If NFLX closes at any price above $310.00 on June 1, both options would expire worthless, and your return on the spread would be 73% (833% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates April 26, 201
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
In The Book on Rental Property Investing, real estate investor and co-host of the BiggerPockets Podcast Brandon Turner has one goal in mind: to give you every strategy, tool, tip, and technique needed to become a millionaire rental property i... read more
This book grew out of a series of letters to my daughter concerning various things - mostly about money and investing - she was not yet quite ready to hear.
Since money is the single most powerful tool we have for navigating this complex wor... read more
#1 NEW YORK TIMES BESTSELLER • Brené Brown has taught us what it means to dare greatly, rise strong, and brave the wilderness. Now, based on new research conducted with leaders, change makers, and culture shifters, she’s showing us how to put... read more
The bestselling The Millionaire Next Door identifies seven common traits that show up again and again among those who have accumulated wealth. Most of the truly wealthy in this country don't live in Beverly Hills or on Park Avenue-the... read more
The instant New York Times bestsellerTiny Changes, Remarkable ResultsNo matter your goals, Atomic Habits offers a proven framework for improving--every day. James Clear, one of the world's leading experts on habit formation, reveals practical... 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
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.
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
This classic text is annotated to update Graham's timeless wisdom for today's market conditions... The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham's philosophy of "value... read more
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