Last week was the worst week for the market in a year. Most investors are not happy campers. A few of our portfolios did quite well, however. Our bearish one gained, of course, but two others did well in spite of the crashing averages.
Last week we discussed our William Tell portfolio which is an options bet that AAPL will move higher. Last week, the stock fell slightly, but our William Tell portfolio gained 2.3%, once again demonstrating that an options portfolio can outperform the outright purchase of stock (see free report that explains it all below).
Our Last Minute portfolio gained 27% on the amount invested last week. This is the portfolio I would like to talk about today.
Carrying Out the Last Minute Strategy
We carry out one portfolio that is a little unusual in many respects. It is entirely in cash until late in the day each Thursday. At that point, we decide whether we expect that SPY will fluctuate by more or less than a dollar on Friday. If there is an important report coming out on Friday (such as the government’s job report which is due next week on the 5th), history has shown that SPY is quite likely to move by a fairly large amount in one direction or the other. Other weeks, when the stock has moved by a dollar or more for several days in a row, we would expect that level of volatility to continue on Friday (which often has the greatest volatility of the week).
If we expect the market (SPY) to move by more than a dollar on Friday, we buy straddles or strangles. If we expect it to move by less than a dollar on Friday, we buy calendar spreads (the long side with only 8 days of remaining life and the short side with one day of remaining life).
Last Thursday, we had trouble deciding which way to go, and we decided to invest less than half our money. Ironically, we could have selected either straddles or calendars and we would have made money last week. Early in the day, the stock fell by almost $1.50, but it ended up falling only $.89 for the day.
We bought straddles, the Jul5-11 131 calls and Jul5-11 130 puts, paying $1.12 each. We bought 20 straddles, investing $2240. When the market tanked early in the morning, we sold those straddles for $1.47. We made a gain of $607, or 27% for the day (after commissions).
This was the fourth consecutive week that the Last Minute portfolio has made a gain. Over that time, we have gained a total of $2860 on an average investment of $3450. That works out to 83% on the money at risk (per unit, and many subscribers invest in lots of units).
We also would have made a gain last week if we had guessed the stock would move less than a dollar on Friday. In that case, since SPY was trading between $130 and $131, we would have bought calendar spreads at the 130 and 131 strikes (either puts or calls could have been used, but we typically would have bought put calendars at the 130 strike and call calendars at the 131 strike).
These two spreads would have made a gain if the net change in SPY for the day was less than a dollar. It was, at $.89, so we couldn’t have gone wrong last week.
We are having a lot of fun with this Last Minute portfolio, and so far, it has been quite profitable as well.
By coming on the Terry’s Tips bandwagon, you can play along with us in the Last Minute portfolio as well as 7 other portfolios, including the William Tell that has done so well as AAPL has moved higher.
We have written a detailed report on how the actual William Tell portfolio gained over 100% in 2010-11 while the stock rose only 25%. You will learn how you can use the Shoot Strategy on any other stock of your choosing as well. You can get this special report free when you subscribe to the Terry’s Tips service for a price which is less than a dinner for two at a decent restaurant – only $79.95 for the whole enchilada, including:
1) My 72-page White Paper which explains my favorite option strategies in detail, including Trading Rules for each, and 20 companies to use with the “Lazy Way” Strategy, (which guarantees a 100% gain in 2 years if the stock stays flat or goes up).
2) 2 FREE months of the Options Tutorial Program (a $49.90 value), which includes:
· A 14-lesson tutorial on trading stock options which will give you a thorough understanding of trading stock options.
· A weekly update of 8 actual portfolios so that you can follow their progress over time.
· Specific trades for each portfolio emailed to you so you may mirror them in your own account if you wish.
· Access to historical analytic reports and portfolio updates posted in the Insiders section of Terry’s Tips.
· If you choose to continue after the 2 free months, do nothing, and you’ll be billed at a discounted rate of $19.95 per month.
3) A FREE special report “How We Made 100% on Apple in 2010-11 While AAPL Rose Only 25%“.
With this one-time offer, you will receive everything for only $79.95, the price of the White Paper alone. But you must order by Tuesday, August 2, 2011. Click here and enter Special Code 802 in the box at the bottom of the page to get the special Apple report as a free bonus.
Tags: AAPL, Bearish Options Strategies, Calendar Spreads, Calls, ETF, Free Options Report, Options Tutorial Program, Portfolio, Puts, shoot strategy, Stocks vs. Stock Options, Straddles, Strangles, Terry's Tips, Volatility, Weekly Options, White Paper, William Tell