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Terry's Tips Stock Options Trading Blog

How to Make 20% in one Month on Your Favorite Stock (Using Options)

January 22nd, 2015

This week I would like to show you the exact positions of one of the 9 portfolios we are currently carrying out for Insiders at Terry’s Tips. It involves one of my favorite places to shop, Costco, and its stock, COST. We expect to make just under 20% on this portfolio in the next four weeks, even if the stock does not go up a single penny. Welcome to the wonderful world of stock options.

Terry

How to Make 20% in one Month on Your Favorite Stock (Using Options)

The basic strategy that we carry out at Terry’s Tips is to buy longer-term options on stocks we like and sell shorter-term options against them. Since the decay rates of the shorter-term options is . . .

Try a Vertical Put Credit Spread on a Stock That You Like

January 8th, 2015

This week I would like to share my thoughts about the market for 2015, and also one of my favorite option strategies when I find a stock I really like. Whenever I find a stock I particularly like for one reason or another, rather than buy the stock outright, I use options to dramatically increase [...]

Further Discussion on an Options Strategy Designed to Make 40% a Month

December 4th, 2014

Last week we outlined an options play based on the historical fluctuation pattern for our favorite ETP called SVXY. This week we will compare those fluctuations to the market in general (using the S&P 500 tracking stock, SPY, as the market definition). We proposed buying a vertical call spread for a one-month-out expiration date with the lower strike about 6% above the starting stock price.

The results were a little unbelievable, possibly gaining an average of 65% a month (assuming the fluctuation pattern continued into the future). If you used an outside indicator to determine which months were more likely to end up with a winning result, you would invest in just under half the months, but when you did invest, your average gain might be in the neighborhood of 152%. Your average monthly gain would be approximately the same if you only invested half the time or all the time, but some people like to increase the percentage of months when they make gains (the pain of losing always seems to be worse than the pleasure of winning).

This week we will offer a second way to bet that the stock will rise by 12.5% in about 38% of the months (as it has in the past). It involves buying a calendar spread rather than a vertical call spread (and sort of legging into a long call position as an alternative to the simple purchase of a call).

Terry

Further Discussion on an Options Strategy Designed to Make 40% a Month:

First. Let’s compare the monthly price fluctuations of SPY and SVXY. You will see that they are totally different. . . .

An Options Strategy Designed to Make 40% a Month

November 28th, 2014

I hope you had a wonderful Thanksgiving with your family and/or loved ones, and are ready for some exciting new information. Admittedly, the title of this week’s Idea of the Week is a little bizarre. Surely, such a preposterous claim can’t possibly have a chance of succeeding. Yet, that is about what your average monthly gain would have been if you had used this strategy for the past 37 months that the underlying ETP (SVXY) has been in existence. In other words, if the pattern of monthly price changes continues going forward, a 40% average monthly gain should result (actually, it would be quite a bit more than this, but I prefer to underpromise and over-deliver). Please read on.

We will discuss some exact trades which might result in 40%+ monthly gains over the next four weeks. I hope you will study every article carefully. Your beliefs about options trading may be changed forever.

Terry

An Options Strategy Designed to Make 40% a Month: First of all, we need to say a few words about our favorite underlying, SVXY. It is not a stock. There are no quarterly earnings reports to push it higher or lower, depending . . .

An Interesting Way to Invest in China Using Options

November 17th, 2014

A week ago, I reported on a spread I placed in advance of Keurig’s (GMCR) announcement which comes after the market close on Wednesday. I bought Dec-14 140 puts and sold Nov-14 150 puts for a credit of $1.80 when the stock was trading just under $153. The spread should make a gain if it ends up Friday at any price higher than $145. You can still place this trade, but you would only receive about $1.15 at today’s prices. It still might be a good bet if you are at all bullish on GMCR.

Today I would like to discuss a way to invest in China using options. One of our basic premises at Terry’s Tips is that if you find a company you like, you can make several times as much trading options on that company than you can just buying the stock (and we have proved this premise a number of times with a large number of companies over the years). If you would like to add an international equity to your investment portfolio, you might enjoy today’s discussion.

Terry

An Interesting Way to Invest in China Using Options: My favorite print publication these days is

Stock Option Strategy for an Earnings Announcement

November 11th, 2014

One of the best times to use an options strategy is just before a company makes its quarterly earnings announcement. That is the time when puts and calls get very expensive. When the earnings come out, investors are usually disappointed or elated, and the stock price often makes a big move. That is why those puts and calls are so expensive just prior to the announcement.

Since our favorite stock options strategy is to sell options just before expiration, the pre-announcement time is often the perfect time to take action. Today I would like to share a recommendation I made to paying subscribers over the past weekend.

Terry

Stock Option Strategy for an Earnings Announcement

Keurig Green Mountain (GMCR) has had quite a year, more than doubling in value. Coke came along at the beginning of 2014 and bought a billion dollars’ worth of GMCR stock (and so far, they have . . .

How to Make 60% to 100% in 2014 if a Single Analyst (Out of 13) is Right – an Update

October 31st, 2014

Last week we discussed vertical spreads. This week, I would like to continue that discussion by repeating some of what we reported in late December of last year. It involves making a relatively long-term (one year) bet on the direction of the entire market.

And again, a brief plug for my step-daughter’s new fitness invention called the Da Vinci BodyBoard – it gives you a full body workout in only 20 minutes a day right in your home. She has launched a KickStarter campaign to get financing and offer it to the world – check it out: https://www.kickstarter.com/projects/412276080/da-vinci-bodyboard

Terry

How to Make 60% to 100% in 2014 if a Single Analyst (Out of 13) is Right – an Update

This is part of we wrote last December – “Now is the time . . .

A Little About Vertical Spreads

October 24th, 2014

Today we will discuss vertical spreads, and how you can use them when you have a strong feeling about which way a stock is headed.

But first, a brief plug for my step-daughter’s new fitness invention called the Da Vinci BodyBoard – it gives you a full body workout in only 20 minutes a day right in your home. She has launched a KickStarter campaign to get financing and offer it to the world – check it out: https://www.kickstarter.com/projects/412276080/da-vinci-bodyboard

Terry

A Little About Vertical Spreads

Vertical spreads are known as directional spreads. When you place such a spread, you are betting that the stock will move in a particular direction, either up or down. If you are right, you can make a nice gain. Even better, you can usually create a vertical spread that also makes money if the stock doesn’t move in the direction you hoped, but stays absolutely flat instead.

Knowing When to Bite the Bullet

October 17th, 2014

Sometimes, the market does just the opposite of what you hoped it would, and you are faced with the decision to hang on and hope it will reverse itself, or accept that you guessed wrong, and close out your position and move on to something else.

That will be our subject today.

Terry

Knowing When to Bite the Bullet

Kenny Rogers said it well – “You’ve got to know when to walk away and know when to run.” We set up demonstration portfolio to trade diagonal spreads on an ETP called SVXY. We were betting that the stock would go up. In each of the last two years, SVXY had doubled in value. Its inverse, VXX, had fallen from a split-adjusted $3000+ to under $30 over the past 5 years, making it just about the biggest dog on the entire stock exchange (selling it short would have made anyone a bundle over that time period). We felt comfortable being long (i.e., the equivalent of owning stock) in something that would do just the opposite of VXX.

In our demonstration portfolio, we decided to . . .

Handling an Adverse Price Change

October 10th, 2014

Our SVXY demonstration hit a real snag this week, as the volatility index (VIX) soared to over 20 and SVXY got hammered, falling from the mid-$80’s level when we started the portfolio to about $65 while we were betting that it would move higher.

I hope you find this ongoing demonstration of a simple options strategy designed to earn 3% a week to be a simple way to learn a whole lot about trading options.

Terry

Handling an Adverse Price Change

There wasn’t much we could do today. The short 80.5 SVXY put that we had sold was . . .

Making 36%

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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