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Archive for January, 2017

Another Interesting Short-Term Play on Aetna (AET)

Friday, January 20th, 2017

your investment if AET doesn’t move up or down by more than $9 in the next two weeks.

Terry

 Another Interesting Short-Term Play on Aetna (AET)

 This week, once again we are looking at Aetna (AET), a health care benefits company.  If you check out its chart, you can see that it does not historically make big moves in either direction, especially down:

AET Aetna Chart 2 January 2017

AET Aetna Chart 2 January 2017

In spite of this lack of volatility, for some reason, IV of the short-term options is extremely high, 44 for the series that expires in 10 days.  The company is trying to purchase Humana, and the justice department may have some objections, and there seems to be concerns how insurance companies will fare under the Trump administration, two factors which may help explain the high IV. Neither of the possible adverse outcomes are likely to occur in the next 14 days, at least in my opinion.

AET is trading at $122 as I write this.  I think it is highly unlikely that it will fall below $113 in 14 days or above $131 when the 3Feb17 options expire.  Here is a trade I made today:

Buy to Open 10 AET 03Feb17 108 puts (AET170317P108)

Sell to Open 10 AET 03Feb17 113 puts (AET170317P113)
Buy to Open 10 AET 03Feb17 136 calls (AET170317C136)

Sell to Open 10 AET 03Feb17 131 calls (AET170317C131) for a credit of $1.48 (selling an iron condor)

There are 4 commissions involved in this trade ($1.25 each at the rate charged by thinkorswim for Terry’s Tips subscribers), so the $1480 I collected from the above trade, I paid $50 in commisisons and netted $1430.  The spread will create a maintenance requirement of $5000 less the $1430 so that my investment (and maximum loss if AET closes below $109 or above $136) is $3570.

If AET closes in two weeks at any price higher than $113 and lower than $131, all these options will expire worthless and there will be nothing more for me to do that decide how I want to spend my 40% gain.

Of course, you could only do one of these spreads if you did not want to commit the entire $3570.

If AET moves quite close to either of these prices, I will send out another note explaining how I intend to cope with a possible loss.  I hope and expect I will not have to do that.  It is only 14 days to wait.

An Interesting Short-Term Play on Aetna (AET)

Wednesday, January 11th, 2017

We are always on the lookout for unusual option prices that might indicate a better-than-usual investment opportunity.  I would like to share one of those recent opportunities with you, one I personally acted on and passed on to Terry’s Tips  subscribers last Saturday.  It involves the venerable insurance company, Aetna.

Terry

 An Interesting Short-Term Play on Aetna (AET)

 This week, we are looking at Aetna (AET), a health care benefits company.  If you check out its chart, you can see that it does not historically make big moves in either direction, especially down:

AET Aetna Chart January 2017

AET Aetna Chart January 2017

In spite of this lack of volatility, for some reason, IV of the short-term options is extremely high, 44 for the series that expires in 10 days.  The company is trying to purchase Humana, and the justice department may have some objections, and there seems to be concerns how insurance companies will fare under the Trump administration, two factors which may help explain the high IV. Neither of the possible adverse outcomes are likely to occur in the next 10 days, at least in my opinion.

AET closed today (Monday) at $122.67.  I think it is highly unlikely that it will fall below $118 in 10 days when the 20Jan17 options expire.  Here is a trade I made today:

Buy to Open 10 AET 20Jan17 113 puts (AET170117P113)

Sell to Open 10 AET 20Jan17 118 puts (AET170117P118) for a credit of $.98  (selling a vertical)

I received $980 less $25 commissions, or $955.  The maintenance requirement, and my maximum theoretical loss in $5000 less the $955 I received, or $4045.  If AET closes at any price higher than $118 in 10 days, both these puts will expire worthless and I will get to keep my $955.  That works out to be a 23% return on my investment, not so bad considering that it is just for 10 days.

In the event that AET is trading below my downside break-even point ($117.06), I will be facing a loss.  If that is the situation, I will roll out this same strike-price spread to a further-out option series, and I should be able to do it at a credit.  That is how I would propose to postpone a possible loss and give the stock some time to return to over $118 where the puts will both expire worthless and give me a greater return than 23% (depending on the amount of the credit I receive).  Of course, I will have to wait longer than 10 days for that profit to come, but I can be a little patient.

How to Make 30% on 5 Blue-Chip Companies in 2017 Even if They Fall by 10%

Tuesday, January 3rd, 2017

Today, we set up a new portfolio at Terry’s Tips  that I would like to tell you about.  It is our most conservative of 9 portfolios.  It consists of selecting 5 blue-chip companies which pay a dividend between 2% and 3.6% and which appear on at least two top analysts’ “top 10” lists for 2017.  This portfolio is designed to gain 30% for the year, and we can know in advance exactly what each of the 5 spreads will make in advance.  For most of these companies, they can fall by 10% over the course of the year and we will still make our 30% gain.

We are also repeating our best-ever offer to come on board before January 11 rolls around.

Terry

How to Make 30% on 5 Blue-Chip Companies in 2017 Even if They Fall by 10%

The spreads we are talking about are vertical put credit spreads.  Once you have found a company you like, you select a strike price which is about 10% below the current price of the stock, and you sell long-term puts (we used options expiring on January 19, 2018) at that strike price while buying the same series puts at a lower strike price.

One of the stocks we picked was Cisco (CSCO).   Here is an example of one of the spreads we placed today.  CSCO yields 3.6% which provides a nice base and support level for the stock.  It is trading just over $30, down a little from almost $32 a couple of months ago.  Our spread will make 30% in one year if CSCO manages to be any higher than $27 when the options expire a year from now.

Here is the exact spread we placed today:

Buy To Open 3 CSCO 19Jan18 23 puts (CSCO180119P23)

Sell To Open 3 CSCO 19Jan18 27 puts (CSCO180119P27) for a credit limit of $.96  (selling a vertical)

We received $96 less $2.50 commissions, or $93.50 per spread, or $280.50 placed in our account for the 3 spreads.  There will be a $400 maintenance requirement per spread ($1200 total) less the $280.50 we received, making our investment $919.50.  If CSCO closes at any price higher than $27 a little over a year from now, on January 19, 2018, both options will expire worthless, and we will get to keep our $280.50.  This makes it a 30% return on our investment.

The actual returns on the other 4 companies we placed this kind of a spread on was actually greater than this amount.  Become a Terry’s Tips  subscriber and get to see every one of them, including other spreads which are a little more aggressive but which yield over 50% for the year and the stock does not have to go up a penny to achieve that return.

The New Year is upon us.  Start it out right by doing something really good for yourself, and your loved ones.

The beginning of the year is a traditional time for resolutions and goal-setting.  It is a perfect time to do some serious thinking about your financial future.

I believe that the best investment you can ever make is to invest in yourself, no matter what your financial situation might be.  Learning a stock option investment strategy is a low-cost way to do just that.

As our New Year’s gift to you, we are offering our service at the lowest price in the history of our company.   If you ever considered becoming a Terry’s Tips Insider, this would be the absolutely best time to do it.  Read on…

Don’t you owe it to yourself to learn a system that carries a very low risk and could gain over 100% in one year as our calendar spreads on Nike, Costco, Starbucks, and Johnson & Johnson have done in the last two years?  Or how our volatility-related portfolio gained 80% in 2016 with only two trades.

So what’s the investment?  I’m suggesting that you spend a small amount to get a copy of my 60-page (electronic) White Paper, and devote some serious early-2017 hours studying the material.

Here’s the Special Offer – If you make this investment in yourself by midnight, January 11, 2017, this is what happens:

For a one-time fee of only $39.95, you receive the White Paper (which normally costs $79.95 by itself), which explains my favorite option strategies in detail, and shows you exactly how to carry them out on your own.

1) Two free months of the Terry’s Tips Stock Options Tutorial Program, (a $49.90 value).  This consists of 14 individual electronic tutorials delivered one each day for two weeks, and weekly Saturday Reports which provide timely Market Reports, discussion of option strategies, updates and commentaries on 11 different actual option portfolios, and much more.

2) Emailed Trade Alerts.  I will email you with any trades I make at the end of each trading day, so you can mirror them if you wish (or with our Premium Service, you will receive real-time Trade Alerts as they are made for even faster order placement or Auto-Trading with a broker).  These Trade Alerts cover all 11 portfolios we conduct.

3) If you choose to continue after two free months of the Options Tutorial Program, do nothing, and you’ll be billed at our discounted rate of $19.95 per month (rather than the regular $24.95 rate).

4) Access to the Insider’s Section of Terry’s Tips, where you will find many valuable articles about option trading, and several months of recent Saturday Reports and Trade Alerts.

With this one-time offer, you will receive all of these benefits for only $39.95, less than the price of the White Paper alone. I have never made an offer better than this in the fifteen years I have published Terry’s Tips.  But you must order by midnight on January 11, 2017. Click here, choose “White Paper with Insider Membership”, and enter Special Code 2017 (or 2017P for Premium Service – $79.95).

If you ever considered learning about the wonderful world of options, this is the time to do it.  Early in 2017, we will be raising our subscription fees for the first time in 15 years.  By coming on board now, you can lock in the old rates for as long as you continue as a subscriber.

Investing in yourself is the most responsible New Year’s Resolution you could make for 2017.  I feel confident that this offer could be the best investment you ever make in yourself.  And your family will love you for investing in yourself, and them as well.

Happy New Year!  I hope 2017 is your most prosperous ever.  I look forward to helping you get 2017 started right by sharing this valuable investment information with you.

Terry

If you have any questions about this offer or Terry’s Tips, please call Seth Allen, our Senior Vice President at 800-803-4595.  Or make this investment in yourself at the lowest price ever offered in our 15 years of publication – only $39.95 for our entire package -here using Special Code 2017 (or 2017P for Premium Service – $79.95).

If you are ready to commit for a longer time period, you can save even more with our half-price offer on our Premium service for an entire year.  This special offer includes everything in our basic service, and in addition, real-time trade alerts and full access to all of our portfolios so that you can Auto-Trade or follow any or all of them.  We have several levels of our Premium service, but this is the maximum level since it includes full access to all nine portfolios which are available for Auto-Trade.  A year’s subscription to this maximum level would cost $1080.  With this half-price offer, the cost for a full year would be only $540.  Use the Special Code MAX17P.

 

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