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 portfolios to spot outperforming stocks and place spreads that take advantage of the momentum.
Will Essent Group (ESNT) Continue the Momentum?
Essent Group has received a lot of attention as of late and several analysts are expecting more upside in the stock price. Here are two of them – Essent Group Earns Outperform Rating from Analysts at Wells Fargo & Company and Zacks: Analysts Anticipate Essent Group Ltd. Will Announce Earnings of $0.77 Per Share.
ESNT has recently seen a pickup of upside momentum after a consolidating mostly sideways from early in the year. The stock broke to fresh record highs late last month and a correction in the second half of last week ended with a bullish engulfing candle on a daily chart, suggestion a continuation of the predominant bullish trend.
ESNT Chart December 2017
If you agree there’s further upside ahead for Essent Group, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next seven weeks.
Buy To Open ESNT 19Jan18 40 Puts (ESNT180119P040)
Sell To Open ESNT 19Jan18 45 Puts (ESNT180119P045) for a credit of $1.38 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when EA was trading near $45. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $136 and your broker would charge a $500 maintenance fee, making your investment $364 ($500 – $136). If ESNT closes at any price above $45 on January 18, 2018, both options would expire worthless, and your return on the spread would be 37% (296% annualized).
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
IBD Underlying Updates December 1, 2017
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
An updated edition of the self-published book that sold more than 100,000 copies, with a new chapter on the 2018 tax cuts.
There's a massive freight train bearing down on the average American investor, and it's coming in the form of higher ta... read more
The ONE Thing
has made more than 350 appearances on national bestseller lists, including #1
Wall Street Journal, New
York Times, and USA Today.
It won 12 book awards, has been translated into... read more
From the #1 New York Times-bestselling author of The 48 Laws of Power comes the definitive new book on decoding the behavior of the people around youRobert Greene is a master guide for millions of readers, distilling ancient wisdom and philos... read more
New York Times
bestseller! More than Five million copies sold!
You CAN take control of your money. Build up your money muscles with America’s favorite finance coach.
... read more
The 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 you stay in? The answer is never black or white, but is best reache... read more
#1 New York Times Bestseller“Significant...The book is both instructive and surprisingly moving.” —The New York TimesRay Dalio, one of the world’s most successful investors and entrepreneurs, shares the unconventional principles that he’s dev... read more
Historically, dividend investing has been viewed as a way for risk-averse, “belt and suspenders” investors to invest in the stock market. Dividend investing is the best way to increase your income while also covering off on your retirement go... read more
With his unmistakable rhymes and signature illustration style, Dr. Seuss creates a classic picture-book ode to aging in You're Only Old Once! On a visit to "the Golden Years Clinic on Century Square for Spleen Readjustment and Muffler Repair,... 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
An updated edition of the blockbuster bestselling leadership book that took America and the world by storm, two U.S. Navy SEAL officers who led the most highly decorated special operations unit of the Iraq War demonstrate how ... read more