Barron’s had an article this weekend that highlighted the prospects of TD Ameritrade Holding Corp (NASDAQ: AMTD). AMTD closed on Friday at 15.79. I agree that the downside is limited due to potential merger activity, but looking at the chart AMTD is below its 10, 50 and 100 day moving averages. Only the 20 day could provide support and it doesn’t show a history of caring about the 20 day. In addition, when charting the trend lines you see the lows getting lower and highs getting lower. AMTD is almost dead center between the falling upper trend line and lower trend line. While AMTD could reach back for the upper line again soon, the lower line is where I’m going to be targeting to sell some naked puts. If AMTD drops below 15, the near term puts should jump due to both added intrinsic value and increased volatility. Going back to the Barron’s article, the dip should only be that, a temporary dip – making it an ideal time to start writing puts. I always look at both sides of the options trading opportunity just in case I’d prefer to write covered calls in my IRA. That will be a “game time” decision though depending on the premiums. If there’s still that bullish tilt, like in AAPL, the at-the-money premiums could favor selling covered calls over selling naked puts.
Investing in Stocks Through Options
