Option Trade of the Week – Cloudy Outlook

December 13, 2023

Dear [[firstname],

I have never written for some time as a result of the credit weren’t shut sufficient to my goal entry costs. This week, nonetheless, the credit score is greater than once I despatched the commerce to our premium subscribers, which means your most revenue is now higher.

Before I get to the commerce, I need to let you understand that we’re winding up one other stable 12 months for our Terry’s Tips portfolios. Our QQQ portfolio is up greater than 70% for the 12 months, whereas our MSFT portfolio is up greater than 55%.

You cannot afford to overlook out on these earnings in 2024. Treat your self to an early vacation present with a subscription to Terry’s Tips. For our loyal publication subscribers (that is you), I’m in fact protecting the sale going that saves you greater than 50% on a month-to-month subscription to Terry’s Tips.

You’ll get ,

  • A month of all commerce alerts in our 4 portfolios, giving detailed directions for getting into and exiting positions. Trade one portfolio or all 4. It’s as much as you.
  • Four to 5 (relying on the month) weekly problems with our Saturday Report, which reveals all of the trades and positions for our 4 portfolios, a dialogue of the week’s buying and selling exercise and early entry to our Option Trade of the Week,
  • Instructions on the right way to execute the 10K Strategy by yourself.
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I stay up for having you be part of within the enjoyable and earnings! Now on to the commerce…

Cloudy Outlook

Sorry for the awful title. I could not provide you with something intelligent for at the moment’s inventory, which, fairly frankly, I’ve by no means heard of. That’s OK, although, as a result of I do know little to nothing about cloud-based software program for the well being sciences, which is what Veeva Systems (VEEV) offers. I do not actually care about what an organization does, or if I’ve ever heard of them. I do know that the inventory has liquid choices with ample open curiosity and fairly slender bid/ask spreads, which is a should for our trades.

I additionally know that VEEV reported earnings after the shut on Wednesday. The firm barely beat each the revenue and income forecasts however pulled again income steerage for the approaching quarter. It’s price noting {that a} month in the past, VEEV plunged almost 15% after decreasing income steerage on lower-than-expected companies gross sales.

The earnings information apparently spooked the market, which drove VEEV greater than 7% decrease on Thursday earlier than the inventory recovered to shut down 3%. Analysts have been additionally edgy, as evidenced by a number of worth goal reductions (there was one enhance). But the consensus goal worth stays greater than 20% above Friday’s shut, which appears overly optimistic. Analysts are additionally firmly within the “purchase” camp for VEEV, which additionally appears misplaced for a inventory that has underperformed the market this 12 months.

On the charts, VEEV has made little progress after the November plunge. In reality, the shares are down 23% from their 2023 excessive hit in September. This slide has been effectively guided by the 20-day shifting common, which has allowed solely a handful of closes above it since mid-October. The technical degree I’m watching is 180, a degree of staunch resistance the inventory has failed to shut above for the reason that November plummet. That can also be the sight of the quick name strike of our credit score unfold. Note that the 20-day sits between 180 and the present inventory worth, including one other layer of resistance.

Option Trade of the Week – Cloudy Outlook 3

If you agree that the inventory will proceed to respect the monthlong resistance degree and stick near its 20-day shifting common (blue line), think about the next credit score unfold commerce that depends on VEEV staying under $180 (purple line) by means of expiration in 6 weeks:

Buy to Open the VEEV 19 Jan 185 name (VEEV240119C185)
Sell ​​to Open the VEEV 19 Jan 180 name (VEEV240119C180) for a credit score of $1.25 (promoting a vertical)

Option Trade of the Week – Cloudy Outlook
Option Trade of the Week – Cloudy Outlook 4

This credit score is $0.12 lower than the mid-point worth of the unfold at Friday’s $172.71 shut. Unless VEEV falls sharply on the open on Monday, you need to have the ability to get near that worth.

The fee on this commerce ought to be not more than $1.30 per unfold. Each unfold would then yield $123.70. This commerce reduces your shopping for energy by $500, making your web funding $376.30 per unfold ($500 – $123.70). If VEEV closes under $180 on Jan 19, the choices will expire nugatory and your return on the unfold can be 33% ($123.70/$376.30).

Testimonial of the Week

It is commonly stated that choices are to inventory buying and selling as chess is to checkers. I used to be trying to discover the chess grasp amongst the checker’s champs, and Terry is the one. Looking for very good but comprehensible strategy to commerce choices? Look no additional. ~ Phil Wells

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Any questions? Email Jon@terrystips.com, Thank you once more for being part of the Terry’s Tips publication.

Happy buying and selling,


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