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Put Options

Buying a put option gives you the right (but not the obligation) to sell 100 shares of a company's stock at a certain price (called the strike price) from the date of purchase until the third Friday of a specific month (called the expiration date).

People buy puts because they hope the stock will go down, and they will make a profit, either by selling the puts at a higher price, or by exercising their option (i.e., forcing the seller of the put to buy the stock at the strike price at a time when the market price is lower).

Put options are quoted in dollar terms (e.g., $3.25), but they actually cost 100 times the quoted amount (e.g., $325), plus an average of $1.50 commission (charged by my discount broker - commissions charged by other brokers may differ).

Terry's Tips Stock Options Trading Blog

May 28, 2015

How to Make 80% a Year With Long-Term Option Bets

One of my favorite options plays is a long-term bet that a particular stock will be equal to or higher than it is today at some future date. Right now might be a perfect time to make that kind of a bet with one of my favorite stocks, Apple (AAPL).

Each January, I pick several stocks I feel really positive about and buy a spread that will make an extraordinary gain if the stock is flat or any higher when the options expire one year out. Today I would like to tell you about one of these spreads we placed in one of the Terry’s Tips portfolios we carry out, and how you can place a similar spread right now. If AAPL is only slightly higher than it is today a year from now, you would make 100% on your investment.

Terry

How to Make 80% a Year With Long-Term Option Bets

I totally understand that it may seem preposterous to think that over the long run, 80% a year is a possible expectation to have for a stock market investment. But if the AAPL fluctuates in the future as it has in the past, it will absolutely come about. It can be done with a simple option spread that can be placed right now,

May 14, 2015

How to Make Gains in a Down Market With Calendar Spreads

This week I came to the conclusion that the market may be in for some trouble over the next few months (or longer). I am not expecting a crash of any sort, but I think it is highly unlikely that we will see a large upward move anytime soon.

Today, I would like to share my thinking on the market’s direction, and talk a little about how you can use calendar spreads to benefit when the market (for most stocks) doesn’t do much of anything (or goes down moderately).

Terry

How to Make Gains in a Down Market With Calendar Spreads

For several reasons, the bull market we have enjoyed for the last few years seems to be petering out. First, as Janet Yellen and . . .

April 29, 2015

Check Out a Long-Term Bet on FaceBook (FB)

In the family charitable trust I set up many years ago, I trade options to maximize the amounts I can give away each year. In this portfolio, I prefer not to actively trade short-term options, but each year, I make selected bets on companies I feel good about and I expect they won’t tank in price over the long run. Last week, I made such a bet on FaceBook (FB) that I would like to tell you about today. The spread will make over 40% in the next 8 months even if the stock were to fall $5 over that time.

Terry

Check Out a Long-Term Bet on FaceBook (FB)

When most people think about trading options, they are thinking short-term. If they are buying calls in hopes that the stock will skyrocket, they usually by the cheapest call they can find. These are the ones which return the greatest percentage gain , , ,

Making 36%

Making 36% – A Duffer's Guide to Breaking Par in the Market Every Year in Good Years and Bad

This book may not improve your golf game, but it might change your financial situation so that you will have more time for the greens and fairways (and sometimes the woods).

Learn why Dr. Allen believes that the 10K Strategy is less risky than owning stocks or mutual funds, and why it is especially appropriate for your IRA.

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