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Terry's Tips Stock Options Trading Blog

3% a Week Possible With This Strategy?

July 29th, 2014

Today I would like to share a strategy with you that seems to make sense to me. I have not back-tested it, and I am not exactly positive that it will work. But I think it will. And I will only need to commit $1500 to test it out (actually, a little less than that as you will see). I invite you to follow along if you wish. For the next few weeks, I will send out any trades I make so you can mirror them if you wish.

My gut feeling tells me that this strategy could make 3% each week. I have set up a separate brokerage account with $1500 to test it out.

Terry

3% a Week Possible With This Strategy? This strategy is based on my favorite . . .

Finding Lessons in a Trade

July 21st, 2014

Last week I told you about a bullish short-term bet we made on SVXY because the stock had dropped over $3 in the previous week (and historically, 4 out of 5 times when that happened earlier this year, the stock rose at least $3 in the subsequent week). We placed an order to sell half the calls if they had doubled in price, and that occurred on Tuesday. On Thursday, volatility soared due to the plane being shot down over Ukraine and Israel invading Gaza. It looked like we would just break even on the trade since we had recovered the initial investment, but then, on Friday, the stock rallied $6 and we were able to sell the remaining half for enough to give us a 32% gain on the trade. Not as much as we had originally hoped, but a gain of any sort is always welcome.

Terry

Finding Lessons in a Trade

The big lesson from our experience last week, one that we have had many times, is that there is . . .

A Possible Great Option Trading Idea

July 14th, 2014

Just before the close on Friday, we made a strongly bullish trade on our favorite underlying stock in a portfolio at Terry’s Tips. In my personal account, I bought weekly calls on this same underlying. As I write this in the pre-market on Monday, it looks like that bet could triple in value this week.

I would like to share with you the thinking behind these trades so next time this opportunity comes up (and it surely will in the near future), you might decide to take advantage of it yourself.

Terry

A Possible Great Option Trading Idea: As we have discussed recently, option prices are . . .

Vertical Put Credit Spreads Part 2

July 7th, 2014

Last week I reviewed the performance of the Terry’s Tips options portfolio for the first half of the year. I should have waited a week because this week was a great one – our composite average gained another 6%, making the year-to-date record 22%, or about 3 times as great as the market (SPY) gain of about 7%.

Last week I also discussed a GOOG vertical put credit spread which is designed to gain 100% in the year if GOOG finished up 2014 at any price higher than where it started, something that it has done in 9 of its . . .

Six-Month Review of Our Options Strategies – Part 1

June 30th, 2014

We have just finished the first half of 2014. It has been a good year for the market. It’s up about 6.7%. Everyone should be fairly happy. The composite portfolios conducted at Terry’s Tips have gained 16% over these months, almost 2 ½ times as much as the market rose. Our subscribers are even happier than most investors.

Our results would have been even better except for our one big losing portfolio which has lost nearly 80% because we tried something which was exactly the opposite to the basic strategy used in all the other portfolios (we essentially bought options rather than selling short-term options as our basic strategy does). In one month, we bought a 5-week straddle on Oracle because in was so cheap, and the stock did not fluctuate more than a dollar for the entire period. We lost about 80% of our investment. If we had bought a calendar spread instead (like we usually do), it would have been a big winner.

Today I would like to discuss the six-month results of a special strategy that we set up in January which was designed to make 100% in one year with very little (actually none) trades after the first ones were placed.

Terry

Six-Month Review of Our Options Strategies:

We have a portfolio we call Better Odds Than Vegas. In January, we picked . . .

Maybe it’s Time to Buy Options Rather Than Sell Them

June 23rd, 2014

Last week I recommended buying a calendar spread on SVXY to take advantage of the extremely high option prices for the weekly options (at-the-money option prices had more than doubled over the past two weeks). The stock managed to skyrocket over 7% for the week and caused the calendar spread to incur a loss. When you sell a calendar spread, you want the stock to be trading very close to the strike price when the short options expire. When the underlying stock makes a big move in either direction, you generally lose money on these spreads, just as we did last week.

Ironically, this spread . . .

An Interesting Trade to Make on Monday

June 16th, 2014

The recent developments in Iraq have nudged options volatility higher, but for one underlying, SVXY, it has apparently pushed IV through the roof. This development has brought about some potentially profitable option spread possibilities.

Terry

An Interesting Trade to Make on Monday

In case you don’t know what . . .

Check Out the Volatility in SVXY

June 9th, 2014

This week is a further discussion of my favorite ETP (Exchange Traded Product), SVXY. We have already discussed this unusual equity. Because of contango, it is destined to move higher every week that there is not a market crash or correction. It has doubled in value in each of the last two years. If you have an idea of which way an underlying is headed, there are extremely attractive option strategies that you might use. I will talk about one such strategy this week.

Terry

Check Out the Volatility in SVXY

Every week for the past four weeks in my personal . . .

Contango, Backwardation, and SVXY

May 19th, 2014

This week I would like to introduce you to a thing called contango. This is relevant today because contango just got higher than I have seen it in many years – over 10% while most of the time, it hangs out in the 3% – 4% range. This measure becomes important when you are trading in my favorite ETP (Exchange Traded Product), SVXY. If your eyes haven’t glazed over yet, read on.

Terry

Contango, Backwardation, and SVXY

There seems to be a widespread need . . .

A Look at the Downsides of Option Investing

May 12th, 2014

Most of the time we talk about how wonderful it is to be trading options. In the interests of fair play, today I will point out the downsides of options as an investment alternative.

Terry

A Look at the Downsides of Option Investing

1. Taxes. Except in very rare circumstances, all gains are taxed as short-term capital gains. This is essentially the same as ordinary income. The rates are as high as your individual personal income tax rates. Because of

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins