This week we’re looking at another Investor’s Business Daily (IBD) Top 50 Listed Companies. We use this list in one of our options portfolios to identify outperforming stocks and place option spreads that take advantage of the momentum.
LOGI has rebounded 230% from its lows last year, and several analysts believe the uptrend will continue. Here are two of them – Logitech (LOGI) reports next week: Wall Street expects earnings growth and 5 computer stocks to buy that are not Apple or Microsoft.
There has been a steady upward trend since November. During this time the stock was trading within a rising channel and buying flat losses. If LOGI pulls back towards channel support, there could be a good buying opportunity in terms of current levels. The 20-day moving average also plays near the lower bound of the trend channel to create a confluence of support.
If you are okay with LOGI having more benefits ahead of you, consider this trade, which relies on the stock staying above $ 100 by the expiration in five weeks.
Buy to open LOGI 19FEB21 95 puts (LOGI210219P95)
Sale to open LOGI 19FEB21 100 Puts (LOGI210219P100) for $ 2.08 credit (sale of a vertical)
This balance is $ 0.02 below the midpoint of the options spread when LOGI was trading near $ 101. If the stock doesn’t recover quickly from here, you should be able to get close to that amount.
Your commission on this trade is only $ 1.30 per spread. Each spread would then be $ 206.70. This will reduce your purchasing power by $ 500 and your investment by $ 293.30 ($ 500- $ 206.70). If LOGI closes at a price above $ 100 on February 19th, both options will expire worthless and your return on the spread will be 70% ($ 206.70 / $ 293.30) or 798% on a yearly basis.
Changes to Investor’s Business Daily (IBD) Top 50 This Week:
We noticed that the Investor’s Business Daily The top 50 list has been a reliable source of stocks that are likely to rise higher in the short term. Recent additions to the list may be particularly good choices for this strategy, and deletions may be good indicators of getting out of a position you may already have in that stock.
As with all investments, you should only trade options with money that you can really afford to lose.
Have fun trading,
Tags: Bearish Options Strategies, Bullish Options Strategies, LOGI, Logitech, Monthly Options, Options Tutorial Program, Profit, Profits, Puts, Tech Stocks, Vertical Put Spread, Volatility, Weekly Options
This entry was posted on Monday January 18th, 2021 at 7:17 am and is filed under Coffee Can Investing, Last Minute Strategy, Lazy Way Strategy, Monthly Options, Stock Option Trading Idea of the Week, Weekly Options.