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Auto-Trade FAQ

Auto-Trade is a mechanism whereby an investor enters into an agreement with his broker authorizing the broker to make trades in the investor’s account based on recommendations of a financial newsletter such as Terry’s Tips.

It is important to understand that we are not a licensed investment advisor. We publish an investment newsletter that maintains several portfolios (with different strategies and underlying stocks or ETFs). We offer investment ideas but we are not managing your money or acting as an investment advisor. We do not make recommendations concerning which portfolios might be best for you. If you choose to mirror one of our portfolios, you are making an investment decision on your own, regardless of whether you have signed up for Auto-Trade with your broker or not.

Subscribers need a margin level account to participate in auto-trade though Terry's Tips will never trade on margin.  Most subscribers use regular investment accounts for auto-trade and though all of our trades are okay to do in a retirement account, tdameritrade has discontinued allowing subscribers to participate in auto-trade with an IRA.  

Subscribers to our Premium Service receive (if they request it) real-time Trade Alerts emailed to them as well as to a broker of their choice where they might have an Auto-Trade arrangement. Our regular service subscribers receive Trade Alerts at the end of the day when our recommended prices might not still be available, and these subscribers are not eligible to sign up for Auto-Trade (for Terry’s Tips) with their brokers.

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How much does it cost?

Our subscription is $1,970 yearly or $197 monthly. One of the great features is that the cost of the program does not come out of your invested capital as it does with so many other investments.

How do I sign up for Auto-Trade?

First you would sign up for our Premium membership and select the portfolio(s) you'd like to follow. Then you would open and fund an account with a participating broker, select Terry's Tips as your newsletter provider, and select the number of units of each portfolio you would like to trade. Full instructions are provided for our members.

What brokers offer Auto-Trade?

Contact us directly for more infromation about brokers and Auto-Trade

Does my Auto-Trade account have to be separate from other accounts?

It is recommended that you set up a separate account for Auto-Trade although it is not necessary.

Can I get out of the Auto-Trade program at any time?

Yes, you may cancel at any time. You must cancel with Terry's Tips as well as with the broker. You are responsible for removing any current positions from your account when you cancel.

Do you have access to my Auto-Trading account?

No. We have no access to your personal accounts. We have no idea how much money you have invested or what other holdings you have.

What should I do if I decide to add (or remove) other portfolios through Auto-Trade?

Please email autotradeREMOVETHISBEFORESENDING@terrystips.com with the name of the portfolio you will be adding (or removing). Your billing will be adjusted accordingly.

Can I still join a portfolio even if I missed the start date?

Yes, a member may join any current portfolio. The only thing to note is that the unit amount is no longer the flat starting value. Once the portfolio starts trading, the unit value becomes a variable and is based on the actual account value. If you are not an Insider of Terry's Tips, please inquire about the most recent unit values for our various portfolios at autotradeREMOVETHISBEFORESENDING@terrystips.com.

Current Terry's Tips Insiders can learn the approximate amount required to join any of the current strategy portfolios by reviewing the Summary of Strategy Portfolios chart in our Saturday Report.

Is there a limit to how much I can invest?

No. There is no limit to how much money you can invest. In fact, we know nothing about your account or how much investment capital you have devoted to mirroring our portfolios.

Is there a limit to how many people or how much total capital this program can handle?

At the present time, we are not worried that the collective trades of Terry's Tips subscribers who have signed up for Auto-Trade with their brokers will affect the market. In fact, our experience has been that the larger the number of options your broker places as a single order, the better the price that can be negotiated.

When option positions are put on, the person on the other side of the trade is usually a market maker (Terry used to be one, so he has a solid understanding of how they work). The market maker earns his living by buying at the bid price and selling at the asked price - the more action for him, the better. He usually seeks a delta neutral position, so that he does not care which way the market moves.

There are dozens of other spread strategies a market maker employs - including buying or selling the stock, use of both puts and calls - back spreads, butterflys, trading against the box, ratio spreads, vertical spreads, diagonal spreads, straddles, and even strangles. Whenever a market maker is faced with a large demand for one particular option, he will use that demand as part of a larger strategy he is following. The bottom line is that large numbers of any single option can be traded without affecting its price (this does not hold true for less-actively traded options in individual companies, however).

Terry's Tips Stock Options Trading Blog

September 20, 2021

A Salesforce to be Reckoned With


As
its ticker symbol implies, Salesforce.com (CRM) provides cloud solutions for
customer relationship management needs. CRM reported earnings in late August
that blew away expectations on both the top and bottom lines. The report was
met by the usual round of target price increases that reached as high as $340
(CRM closed at $260 on Friday).





The
stock gapped higher after the report and extended as much as 5.5% higher the
next day, eventually closing with a 2.5% gain. But the shares then sagged,
joining the rest of the market in the early-September swoon. In fact, CRM fell
more than 8% from its post-earnings high.





But the shares appeared to find a bottom last week, thanks to the support of the 50-day moving average. Since turning higher in May, the 50-day has supported pullbacks in July and August. CRM has been stepping higher since a low in early March, putting in a series of higher highs and lows in a rally that has covered nearly 30%. This trade is relying on this trendline support holding for the next six weeks, as the short 250 put of our credit spread is just below the 50-day.









If you agree that CRM will stay above the 50-day moving
average (blue line in chart), consider the following trade that relies on the
stock remaining above 250 (red line in chart) through expiration in six weeks.





Buy to Open CRM 29Oct 245 put
(CRM211029P245)

Sell to Open CRM 29Oct 250 put (CRM211029P250) for a credit
of $1.10 (selling a vertical)





This credit is $0.02 less
than the mid-point of the option spread
when CRM was trading at $260. Unless the stock rallies quickly from here, you
should be able to get close to this amount. Your commission on this trade will
be only $1.30 per spread.  Each spread
would then yield $108.70. This trade reduces your buying power by $500 and makes
your net investment $391.30 ($500 – $108.70). 
If CRM closes above $250 on October 29, both options will expire worthless and your return on the spread would
be 27% ($108.70 / $391.30).


September 13, 2021

Going Once, Going Twice … Sold on CPRT


Going Once, Going Twice … Sold on CPRT





Copart (CPRT) provides online auction and vehicle remarketing services in the U.S. and several other countries. On Wednesday, the company reported Q4 earnings that easily beat on the top and bottom lines. Used car prices are soaring and CPRT is positioned perfectly to leverage the market. Analysts seem to agree, as CPRT received several target price increases that ranged up to $165 (CPRT closed at $143 on Friday). Despite the positive news, the stock fell as much as 5% on Thursday before closing 2% lower. However, CPRT gained more than a percent on Friday amid a down market.









The stock has been in rally mode since late March, gaining more than 30%. The 50-day moving average has been instrumental in guiding the uptrend, containing pullbacks in May, June and August. The trendline appears to be doing its job again, as it supported this week’s post-earnings drop. This trade is relying on this support holding for the next five weeks as the short 140 put of our credit spread is just below the 50-day.





If
you agree that CPRT will stay above the 50-day moving average (red line in
chart), consider the following trade that relies on the stock remaining above
140 (blue line in chart) through expiration in five weeks.





Buy
to Open CPRT 15Oct 135 put (CPRT211015P135)

Sell to Open CPRT 15Oct
140 put (CPRT211015P140) for a credit of $1.20 (selling a vertical)





This
credit is $0.05 less than the mid-point
of the option spread when CPRT was trading at $143. Unless the stock rallies
quickly from here, you should be able to get close to this amount.





Your
commission on this trade will be only $1.30 per spread.  Each spread would then yield $118.70. This
trade reduces your buying power by $500 and makes your net investment $381.30
($500 – $118.70).  If CPRT closes above
$140 on October 15, both options will expire worthless
and your return on the spread would be 31% ($118.70 / $381.30).


August 31, 2021

Get INTU This Trade


Software
developer (QuickBooks, TurboTax) Intuit (INTU) reported earnings on Aug. 24
that handily beat estimates on all fronts. Earnings came in at $1.97 per share,
topping the analyst forecast by 24%, while quarterly revenue of $2.56 billion
beat the estimate by 10%. The company also raised its quarterly and annual
revenue and earnings guidance above expectations. To top it off, INTU raised
its dividend and approved a new $2 billion repurchase authorization.





The
Street clearly loved the report, as the stock was hit with several large target
price increases (one raised the price 27%). The average new target price after
these raises was around the $640 mark, which is 13% above INTU’s closing price
on Friday.





The stock price took the news and target increases in stride, though, with no change on Thursday after the report. On Friday, the stock resumed its huge rally with a 2.4% gain. INTU is up nearly 50% in 2021, with most of that gain coming in the past 3-1/2 months. The shares have been riding along their 20-day moving average, a trendline that has not allowed one daily close below it since mid-May. The 20-day is currently at 541 but should cross above the 550 level in less than two weeks at its current pace. This is also the site of the short put strike of our credit spread.









If
you agree that INTU will continue its rally along the 20-day moving average,
consider the following trade that relies on the stock remaining above 550
through expiration in seven weeks.





Buy
to Open INTU 15Oct 540 put (INTU211015P540)

Sell to Open INTU 15Oct
550 put (INTU211015P550) for a credit of $2.80 (selling a vertical)





This
credit is $0.05 less than the mid-point
of the option spread when INTU was trading at $566. Unless the stock rallies
quickly from here, you should be able to get close to this amount.





Your
commission on this trade will be only $1.30 per spread.  Each spread would then yield $278.70. This
trade reduces your buying power by $1,000 and makes your net investment $721.30
($1000 – $278.70).  If INTU closes above
$550 on October 15, both options will expire worthless
and your return on the spread would be 39% ($278.70 / $721.30).


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