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Terry's Tips Stock Options Trading Blog

Earnings Season Has Arrived – How to Capitalize on it With Options

April 12th, 2016

For each of the last two Mondays I have told you about an earnings-related trade I made. Today I would like to review my thinking on those trades, update how they are going, and offer you a new idea of a third trade I made his morning.

Terry

Earnings Season Has Arrived – How to Capitalize on it With Options

In the last few weeks leading up to a quarterly earnings announcement, two things usually happen. First of all, the stock often moves higher as the announcement day approaches as some investors start hoping that the company might beat expectations. The second thing is even more likely (and essentially always happens). Implied Volatility (IV) of the option prices moves much high. This means that the prices for options temporarily rise in value across the board. The greatest upward move in IV takes place in the options series which expires just after the announcement date.

The reason that IV becomes greater at this time is that once earnings are announced, the stock is likely to move either up or down by a much larger amount than it does most trading days. When volatility is . . .

How to Play the Facebook (FB) Earnings Announcement

April 4th, 2016

Facebook (FB) will announce earnings on April 27, and this presents an opportunity to make an investment similar to the one I suggested last week regarding Starbucks (SBUX). One of the SBUX trades has already resulted in a small profit and has a guaranteed additional profit which could be significant in two weeks when the post-announcement options expire. I hope you enjoy reading about the trades I made in FB this morning (and my reasoning behind them).

Terry

How to Play the Facebook (FB) Earnings Announcement

First of all, a quick update on the suggestion I made one week ago concerning the upcoming SBUX announcement on April 21st. At that time, with SBUX trading about $58.60, I suggested 3 different ways to play this announcement, all of which were based on the stock moving a bit higher in anticipation of that big day (a good deal of the time, stocks do move higher in advance of the earnings announcement day). All three trades have increased in value since last week because SBUX has indeed . . .

Some Ways to Play the SBUX Earnings Announcement

March 28th, 2016

In the few weeks before a company makes its quarterly earnings announcement, option prices make some predictable changes and the stock usually edges up in advance of the announcement. There are several ways you can take advantage of these changes to pick up some nice trading profits using stock options. Today I would like to share some trades I placed today on Starbucks (SBUX).

Terry

Some Ways to Play the SBUX Earnings Announcement

SBUX is slated to announce earnings on April 21st. Implied Volatility (IV) for pre-announcement weeks is 20 and it pops up to 25 for the Apr4-15 series which expires just after the announcement. The next two weekly series also have an IV of 25 which is likely to fall to 20 after the announcement.

SBUX has a record of coming very close to meeting earnings . . .

How to make 45% with a Safe Bet on GM

March 11th, 2016

Lots of people like GM. It is one of the most popular stocks in some of the largest mutual funds in America. Investors seem to like the 5.2% dividend it pays. Today I will show you how you could make 8 times that much with an options bet that will net 45% even if the stock doesn’t go up by a penny.

Terry

How to make 45% with a Safe Bet on GM

First, an update on my last 3 trade recommendations. Five weeks ago, I suggested a trade that would make 66% after commissions if Facebook (FB) closed at any price above $97.50 on March 18, 2016. FB is now trading above $106 and that looks like a sure winner when it closes out a week from today.

A little over 3 weeks ago I suggested a similar trade on Costco (COST) when it was trading at $147.20. This one would make 40% after commissions if COST finishes at any price above $145 next Friday (March 18th). It is now trading near $152. This one also looks like a sure winner.

The third suggestion . . .

How to Own 100 Shares of Google (Worth $71,600) for $15,000 or Make 12% a Month With Options

March 8th, 2016

Way back when Google (GOOGL) went public at $80 a share, I decided that I would like to own 100 shares and hang on to it for the long run. Obviously, that was a good idea as the stock is trading today at $716. My $8000 investment would now be worth $144,000 (the stock had a 2-for-1 split in November 2014) if I had been able to keep my original shares. Unfortunately, over the years, an options opportunity inevitably came along that looked more attractive to me than my 100 shares of GOOGL, and I sold my shares to take advantage of the opportunity.

Many times my investment account had compiled a little spare cash, and I went back into the market and bought more shares of GOOGL, always paying a little more to buy it back. At some point it felt like I just had too much money tied up in it. An $8000 commitment is one thing, but $144,000 is a major commitment.

Today I would like to share how I own the equivalent of 100 shares of GOOGL for an investment of less than . . .

A $40 Option Bet on Nike (Including Commissions)

February 25th, 2016

I would like to tell you about an option trade I made today and share my thinking process that went into it. I figure it has an extremely low risk of losing and it could easily double or triple your investment (after paying the commissions). The investment amount per contract is quite low and it is mathematically impossible to lose all of your bet. You will only have to wait two or three weeks to learn the outcome. It involves one of my favorite stocks, Nike (NKE).

Terry

A $40 Option Bet on Nike (Including Commissions)

First, an update on my last two trade recommendations. Two weeks ago, I suggested a trade that would make 66% after commissions if Facebook (FB) closed at any price above $97.50 on March 18, 2016. FB has now recovered and is about $107 and the spread looks like it will be a sure winner. All you have to do is . . .

Make 40% in One Month With This Costco Trade

February 19th, 2016

Make 40% in One Month With This Costco (Corrected) Trade

Two weeks ago, LinkedIn (LNKD) issued poor guidance while at the same time announced higher than expected earnings. Investors clobbered the stock, focusing on the guidance rather than the earnings. At the same time, as is often the case, another company in the same industry, Facebook (FB) was also traded down. With FB falling to $98, I reported to you on a trade that would make 66% after commissions if the company closed at any price above $97.50 on March 18, 2016. FB has now recovered and is well over . . .

If the market knocks you down, try laughing instead of crying – Some Market Definitions

February 17th, 2016

First, an update on the Facebook (FB) trade I told you about a week ago – it was trading about $98 and the spread I suggested would make 66% if the stock was any higher than $97.50 in one month. FB is now at almost $105 and that is looking like a sure winner. It’s a good feeling to make 66% while lots of people are anguishing over recent losses. Now for a few chuckles today…

Terry

If the market knocks you down, try laughing instead of crying –

Some Market Definitions:

CEO –Chief Embezzlement Officer.

CFO– Corporate Fraud Officer.

BULL MARKET — A random market movement causing an investor to mistake himself for a financial genius.

An Option Trade for Anyone Who Likes Facebook (FB)

February 9th, 2016

The market seems to be crashing because of a fear of a worldwide economic slowdown, and last week a disappointing guidance from LinkedIn (LNKD) spooked many social media stocks like Facebook (FB). I think that FB was sold down far more than it should have and that it will recover soon. Today I made a trade which will make 66% on my investment (after commissions) in 25 days even if FB doesn’t gain a penny from here. I would like to share the details of this option trade with you today.

Terry

An Option Trade for Anyone Who Likes Facebook (FB)

Less than two weeks ago, Facebook had a blow-out quarter that exceeded estimates by a large margin, both on the top and bottom lines. Ad revenue from Instagram topped expectations all around, and the future looks even better, especially in this election year when candidates are finding that social media is one of the best ways to reach voters in local elections (Ted Cruz reportedly spend $10k a day on Instagram in Iowa and won the election).

After the announcement, FB soared . . .

Making a Long-Term Options Bet on Oil

January 17th, 2016

The market is closed for the Marin Luther King holiday today, and maybe you have a little time to see how we plan to make some exceptional returns by playing what might happen with oil prices.

I would like to share with you details on a new portfolio we have set up at Terry’s Tips. It is a long-term bet that the price of oil will eventually recover from its recent 12-year lows, but maybe it will get even worse in the short run before an eventual recovery takes place. In the wonderful world of stock options, you can bet on both possibilities at once, and possibly make double-digit monthly gains while you wait for the future to unfold.

I hope you enjoy my thinking about an option strategy based on the future of oil prices. Maybe you might like to emulate these positions in your own account or become a Terry’s Tips Insider and watch them evolve over time.

Terry

Making a Long-Term Options Bet on Oil

Nobel Laureate Yale University professor Robert Shiller was interviewed by Alex Rosenberg of CNBC on July 6, 2015. He delivered his oft-repeated message that he believed that both stocks and bonds were overvalued and . . .

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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