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
Top-performing mega real estate agent Karen Briscoe's Real Estate Success in 5 Minutes a Day shows that you truly only have to invest five minutes a day to achieve a higher level of success in business and life. Hal Elrod, #1 bestselling aut... read more
Iconoclastic entrepreneur and New York legend Ken Langone tells the compelling story of how a poor boy from Long Island became one of America's most successful businessmen.Ken Langone has seen it all on his way to a net worth beyond his wilde... read more
The fascinating and complex evolutionary relationship of the monarch butterfly and the milkweed plant
Monarch butterflies are one of nature's most recognizable creatures, known for their bright colors and epic ann... read more
A Turing Prize-winning computer scientist and statistician shows how understanding causality has revolutionized science and will revolutionize artificial intelligence
"Correlation is not cau... read more
In The Gifts of Imperfection, Brené Brown, a leading expert on shame, authenticity, and belonging, shares ten guideposts on the power of Wholehearted living—a way of engaging with the world from a place of worthiness. Each day we face a barra... read more
With a passion for helping others and a modern approach to sharing the oils, Sarah Harnisch made it to Platinum in Young Living in just 17 months. Now she’s sharing her strategy in this densely-packed guide to take you from starter kit to Sil... read more
Four-time New York Times best-selling author Gary Vaynerchuk offers new lessons and inspiration drawn from the experiences of dozens of influencers and entrepreneurs who rejected the predictable corporate path in favor of pursuing their dream... read more
The full inside story of the breathtaking rise and shocking collapse of Theranos, the multibillion-dollar biotech startup, by the prize-winning journalist who first broke the story and pursued it to the end, despite pressure from its charisma... read more
The man who created Bluefish, the internationally famous company that makes once-in-a-lifetime events happen for the rich and famous, reveals to the rest of us his trade secrets for making things happen.
Steve Sims' day job is to make the i... read more
If you will live like no one else, later you can live like no one else. Build up your money muscles with America's favorite finance coach. Okay, folks, do you want to turn those fat and flabby expenses into a well-toned budget? Do you want to... read more