from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

1-800-803-4595

Terry's Tips Stock Options Trading Blog

How to Trade Out of an Earnings-Related Options Play

July 7th, 2016

A little over a week ago, I told you about trades I was making in advance of Nike’s earnings announcement. Lots of things didn’t quite work out the way I had expected they would, but I still managed to make over 50% for the week on my trades. There were some good learning experiences concerning how to trade out of calendar spreads once the announcement has been made. You need to tread water until the short options you sold expire and you can close out the spreads, and that can present some challenges.

Today I would like to share those learning experiences with you in case you make similar trades prior to a company’s earnings announcement.

Happy trading.

Terry

How to Trade Out of an Earnings-Related Options Play

According to Openfolio, a site where about 70,000 users share information on their investments, three out of four investors lost money in June, with an average return of -0.10%. This compares to the results of the Terry’s Tips’ Auto-Traded portfolios where 7 of 8 portfolios gained, and the average gain was 15.1%. Our only losing portfolio was a special bet that the short-term price of oil would fall. It didn’t, and we lost a little, but that was nothing compared to 4 of the portfolios which gained over 20% for the month.

One of our portfolios . . .

100% Gain in One Week Possible With Nike Options Trade?

June 27th, 2016

The Brexit vote on Friday crushed markets throughout the world, but it was a great day for Terry’s Tips subscribers who follow the eight actual portfolios we carry out for them to follow if they wish. Our composite gain for the day was greater than 10%, and that was on a day when the Dow fell over 600 points and the market as a whole (SPY) dropped even more.

One of the portfolios we carry out is designed to protect against a market crash or correction. We call it the Better Bear. It gained 34% Friday when the markets tumbled. Friday, like many days, was one when many of us are happy that we trade options rather than simply buy or sell shares of stock.

Today, I would like to share two trades I will be placing on Monday or Tuesday. I think that there is an excellent chance that these trades could double my money in a single week.

Happy trading.

Terry

100% Gain in One Week Possible With Nike Options Trade?

Nike (NKE) has fallen on hard times of late, falling from $68 in early December to $52.59 at the close on Friday. Earnings will be announced after the close on Tuesday, the 28th. Whisper numbers are about 10% higher than public estimates, and options are priced for a higher price after the announcement.

I am an options trader and rarely ever buy stock. I really don’t know if Nike will go up or down after the announcement, but there are some interesting features of the option prices that have caused me to take an interest in the company this week. As I often repeat in this newsletter, implied volatility (IV) of the option prices is the major reason that option prices are “high” or “low” compared to other option prices.

Most of the time, our basic strategy involves buying calendar spreads at a variety of strike prices. A calendar spread (also called a time spread) consists of coincidentally buying and selling either put or call options at the same strike price. The option you buy always has a longer time life than the option you sell. Our gains come from the higher decay rate of the short-term options that we have sold compared to the lower decay rate of the longer-term options that we have bought.

Most of the time, when we . . .

Half-Price Offer Expires at Midnight Today

June 15th, 2016

Our 15th birthday celebration ends at midnight tonight, and the half-price offer will disappear as well. If you have ever considered learning all about the wonderful world of options, this is the best opportunity you will ever see, at least from us. The time it act is now. Don’t let it slip away from you.

Half-Price Offer Expires at Midnight Today

As our 15th birthday present to you, we are offering the lowest subscription price than we have ever offered – our full package, including all the free reports, my White Paper, which explains my favorite option strategies in detail, and shows you exactly how to carry them out on your own, a 14-day options tutorial program which will give you a solid background on option trading, and two months of our weekly newsletter full of tradable option ideas. All this for a one-time fee of $39.95, less than half the cost of the White Paper alone ($79.95).

For this lowest-price-ever $39.95 offer, click here, enter Special Code . . .

Lowest Subscription Price Ever Still Available

June 9th, 2016

This month marks the 15th year in business for Terry’s Tips. We are celebrating this event by offering you our lowest subscription price ever. If you ever wanted to learn all about the wonderful world of options and my favorite options strategy, now is the time to act.

Lowest Subscription Price Ever

As our birthday present to you, we are offering the lowest subscription price than we have ever offered – our full package, including all the free reports, my White Paper, which explains my favorite option strategies in detail, and shows you exactly how to carry them out on your own, a 14-day options tutorial program which will give you a solid background on option trading, and two months of our weekly newsletter full of tradable option ideas. All this for a one-time fee of . . .

Lowest Subscription Price Ever

June 7th, 2016

This month marks the 15th year in business for Terry’s Tips. We are celebrating this event by offering you our lowest subscription price ever. Read on.

Today I would also like to share with you a small bet I made today on Nike. It should make 60% in 8 months even if the stock does not go up a penny. It can actually fall a little and you would still make 60%. But the big news today is our 15th birthday celebration offer.

Lowest Subscription Price Ever

As our birthday present to you, we are offering the lowest subscription price than we have ever offered – our full package, including all the free reports, my White Paper, which explains my favorite option strategies in detail, and shows you exactly how to carry them out on your own, a 14-day options tutorial program which will give you a solid background on option trading, and two months of our weekly newsletter full of tradable option ideas. All this for a one-time fee of $39.95, less than half the cost of the White Paper alone ($79.95).

For this lowest-price-ever $39.95 offer, click . . .

List of Options Which Trade After Hours (Until 4:15)

May 31st, 2016

Some time ago, I noticed that the value of some of our portfolios was changing after the market for the underlying stock had closed. Clearly, the value of the options was changing after the 4:00 EST close of trading. I did a Google search to find a list of options that traded after hours, and came up pretty empty. But now I have found the list, and will share it with you just in case you want to play for an extra 15 minutes after the close of trading each day.

Terry

List of Options Which Trade After Hours (Until 4:15)

Since option values are derived from the price of the underlying stock or ETP (Exchange Traded Product), once the underlying stops trading, there should be no reason for options to continue trading. However, more and more underlyings are now being traded in after-hours, and for a very few, the options continue trading as well, at least until 4:15 EST.

Options for the following symbols trade an extra 15 minutes after the close of trading – DBA, DBB, DBC, DBO, DIA, EFA, EEM, GAZ, IWM, IWN, IWO, IWV, JJC, KBE, KRE, MDY, MLPN, MOO, NDX, OEF, OIL, QQQ, SLX, SPY, SVXY, UNG, UUP, UVXY, VIIX, VIXY, VXX, VXZ, XHB, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, XME, XRT.

Most of these symbols are (often erroneously) called ETFs . . .

How To Protect Yourself Against a Market Crash With Options

May 23rd, 2016

Today’s idea is a little complicated, but it involves an important part of any prudent investment strategy. Market crashes do come along every once in a while, and we are eight years away from the last one in 2008. What will happen to your nest egg if it happens again this year?

Options can be a good form of market crash insurance, and it is possible to set up a strategy that might even make a small gain if the crash doesn’t come along. That possibility sets it apart from most forms of insurance which cost you out-of-pocket money if the calamity you insure against doesn’t occur.

Terry

How To Protect Yourself Against a Market Crash With Options

There are some strong indications that the old adage “Sell in May and Go Away” might be the appropriate move right now. Goldman Sachs has downgraded its outlook on equities to “neutral” over the next 12 months, saying there’s no particular reason to own them. “Until we see sustained signals of growth recovery, we do not feel comfortable taking equity risk, particularly as valuations are near peak levels,” the firm said in a research note.

For several months, Robert Shiller has been warning that the market is seriously overvalued by his unique method of measuring prices against long-term average p/e’s. George Soros is keeping the bears happy as well, doubling his wager against the S&P 500. The billionaire investor, who has been warning that the 2008 financial crisis could be repeated due to China’s economic slowdown, bought 2.1M-share “put” options in SPY during Q1. The magnitude of his bet against SPY is phenomenal, essentially 200 million shares short. Of course, he almost always deals in stratospheric numbers, but the size of this bet indicates that he feels pretty strongly about this one. He didn’t become a billionaire by being on the wrong side of market bets.

So what can you do to protect yourself against a big tumble in the market? We are setting up a bearish . . .

How Option Prices are Determined

May 17th, 2016

Today I would like to pass along some basic information about how stock options prices are determined. I have discussed this in the past, but we now have many new subscribers who may not have seen our earlier blogs. I apologize if this is old information for you.

Terry

How Option Prices are Determined

Of course, the market ultimately determines the price of any option as buyers bid and sellers ask at various prices. Usually, they meet somewhere in the middle and a price is determined. This buying and selling action is generally not based on some pie-in-the-sky notion of value, but is soundly grounded on some mathematical considerations.

There are 5 components that determine the value of an option:

1. The price of the underlying stock

An Options Play on Facebook Which Should Make 50% in 60 Days

May 11th, 2016

Today I would like to suggest an options trade on Facebook (FB). It will involve waiting 6 weeks to close out. Many option players have short attention spans and don’t like to wait that long. On the other hand, I think this trade has a very high likelihood of making a profit of at least 50%, even if the stock fluctuates more than we might like. To my way of thinking, it should be worth the wait, especially since I think that there is a very small likelihood that this play would end up losing money.

Terry

An Options Play on Facebook Which Should Make 50% in 60 Days

Over the past month I have suggested legging into calendar spreads in advance of an earnings announcement for 7 different companies (FB, COST, TWX, TGT, SBUX, and JNJ, and ABBV). In every case, I was personally successful at creating a calendar spread at a credit and guaranteeing myself a profit no matter where the stock price ended up after the announcement. You should have been able to duplicate every one of these successes as well. I got a kick out of having 7 consecutive winning trades, some of which made me more than 100% on my amount at risk.

More Legging Into Pre-Announcement Calendar Option Spreads

May 3rd, 2016

Over the past month I have suggested legging into calendar spreads in advance of an earnings announcement for 4 different companies. In every case, you should have been able to duplicate my success in creating a calendar spread at a credit. These spreads are absolutely guaranteed to make a profit since the long side of the spreads has more time remaining and will always be worth more than the short side, regardless of what the stock does after the earnings announcement.

Today I would like to suggest two more companies where I am trying to set up calendar spreads at a credit.

Terry

More Legging Into Pre-Announcement Calendar Option Spreads

First, an update on the Facebook (FB) pre-earnings play I suggested last week. Earlier, I showed how you could leg into a calendar spread in FB at the 110 strike, and this proved to be successful. In addition, last week I suggested something different – the outright buying of 17JUN16 – 29APR16 calendar spreads at the 105 strike (using puts and paying $1.58), the 110 strike (using puts and paying $1.52) and the 115 strike (using calls and paying $1.52). I was able to execute all three of these spreads in my account at these prices, and you should have been able to do the same.

Making 36%

Making 36% — A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

Order Now

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