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Terry's Tips Stock Options Trading Blog

An Interesting Trade to Make on Monday

June 16th, 2014

The recent developments in Iraq have nudged options volatility higher, but for one underlying, SVXY, it has apparently pushed IV through the roof. This development has brought about some potentially profitable option spread possibilities.

Terry

An Interesting Trade to Make on Monday

In case you don’t know what . . .

Check Out the Volatility in SVXY

June 9th, 2014

This week is a further discussion of my favorite ETP (Exchange Traded Product), SVXY. We have already discussed this unusual equity. Because of contango, it is destined to move higher every week that there is not a market crash or correction. It has doubled in value in each of the last two years. If you have an idea of which way an underlying is headed, there are extremely attractive option strategies that you might use. I will talk about one such strategy this week.

Terry

Check Out the Volatility in SVXY

Every week for the past four weeks in my personal . . .

Contango, Backwardation, and SVXY

May 19th, 2014

This week I would like to introduce you to a thing called contango. This is relevant today because contango just got higher than I have seen it in many years – over 10% while most of the time, it hangs out in the 3% – 4% range. This measure becomes important when you are trading in my favorite ETP (Exchange Traded Product), SVXY. If your eyes haven’t glazed over yet, read on.

Terry

Contango, Backwardation, and SVXY

There seems to be a widespread need . . .

A Look at the Downsides of Option Investing

May 12th, 2014

Most of the time we talk about how wonderful it is to be trading options. In the interests of fair play, today I will point out the downsides of options as an investment alternative.

Terry

A Look at the Downsides of Option Investing

1. Taxes. Except in very rare circumstances, all gains are taxed as short-term capital gains. This is essentially the same as ordinary income. The rates are as high as your individual personal income tax rates. Because of

Volatility’s Impact on Option Prices

April 28th, 2014

Today I would like to talk a little about an important measure in the options world – volatility, and how it affects how much you pay for an option (either put or call).

Terry

Volatility’s Impact on Option Prices

Volatility is the sole variable that can only be measured after the option prices are known. All the other variables have precise mathematical measurements, but volatility has an essentially emotional component that defies easy understanding. If option trading were a poker game, volatility would be . . .

How Option Prices are Determined

April 21st, 2014

Last week was one of the best for the market in about two years. Our option portfolios at Terry’s Tips made great gains across the board as well. One portfolio gained 55% for the week, in fact. It is fun to have a little money tied up in an investment that can deliver those kinds of returns every once in a while.

This week I would like to discuss a little about what goes into an option price – what makes them what they are?

Terry

How Option Prices are Determined

Of course, the market ultimately determines the . . .

An Interesting Calendar Spread Trade Idea

April 14th, 2014

Today I would like to share with you an investment I made in my personal account just today. It involves buying three calendar spreads and waiting about a month to see if you hit the jackpot. See if you agree with me that it is a potentially great trade.

Terry

An Interesting Calendar Spread Trade Idea

The underlying company is Keurig Green Mountain Coffee (GMCR). I have traded options on this company almost every week for the last few years. I like it because the options carry an exceptionally high implied volatility (IV) because the stock has been so volatile.

Using Puts vs. Calls for Calendar Spreads

April 7th, 2014

I like to trade calendar spreads. Right now my favorite underlying to use is SVXY, a volatility-related ETP which is essentially the inverse of VXX, another ETP which moves step-in-step with volatility (VIX). Many people buy VXX as a hedge against a market crash when they are fearful (volatility, and VXX. skyrockets when a crash occurs), but when the market is . . .

How to Play War Rumors

March 10th, 2014

Last week, on Monday, there were rumors of a possible war with Russia. The market opened down by a good margin and presented an excellent opportunity to make a short-term gain. Today I would like to discuss how we did it at Terry’s Tips and how you can do it next time something like this comes along.

Terry

How to Play War Rumors

When the market opens up at a higher price than the previous day’s highest price or lower than the previous day’s lowest price, it is said to have a gap opening. Gap openings unusually occur when unusually good (or bad) news has occurred. Since there are two days over which such events might occur on weekends, most gap openings happen on Mondays.

Legging Into a Short Iron Condor Spread

March 3rd, 2014

Today I would like share with you the results of an actual trade recommendations I made for my paying subscribers on January 4th of this year and how subsequent price changes have opened up option possibilities that can further improve possibilities for a first investment.

Please don’t get turned off by what this new spread is called.

Terry

Legging Into a Short Iron Condor Spread

In my weekly Saturday Report that I send to paying subscribers, on January 4, 2014 I set up an actual demonstration portfolio in a separate trading account at thinkorswim in which I made long-term . . .

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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