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Tip 2 - Check Out Auto-Trade

Auto-Trade is a service offered by several on-line brokers.  Auto-Trade makes it possible for an investor to carry out an options strategy in his own account without becoming an options guru or making all the trades on his or her own. 

This is how it works.  First, you subscribe to an investment newsletter (we hope you will pick Terry’s Tips, but there are dozens of others you can choose from as well).  Then you sign an agreement with a broker which authorizes him to make trades in your account in accordance with recommendations made by the newsletter.  You specify how much you cash you would like to allocate to the newsletter’s recommendations.

Terry’s Tips operates a little differently than most newsletters.  We maintain 8 actual portfolio accounts (using different underlying stocks or ETFs and risk levels). When you sign up for Auto-Trade at a broker for the Terry’s Tips newsletter, you tell the broker which portfolios you would like to mirror, and how many “units” you would like to employ.  For example, if we have a portfolio that would require $5,000 to mirror, and you would like to invest $10,000 in that portfolio, you would select 2 units. 

For most of our portfolios, when the portfolio gains more than 3% over the "starting" value, we withdraw the gains (in increments of 3%) so that new subscribers can mirror the portfolio with close to the starting value.  Of course, subscribers can decide on their own if they want to withdraw cash from their account, or use it to make other investments.

Terry’s Tips is also different from other newsletters in two important ways.  First, since our portfolios are actual broker accounts, we account for all commissions.  Many newsletters display their results and do not account for commissions.  This is extremely misleading because commissions on option portfolios can be huge – sometimes 30% or more over the course of a year.  Our results are always net of commission costs.

Second, Terry’s Tips portfolio results are an open book. We believe in full disclosure.  Insiders can see every trade ever made in every portfolio.  Nothing is swept under the rug.  Other newsletters may tell you only about the one portfolio you have signed up for, and if that one doesn’t make money for you, they might tell you that you were just unlucky because you didn’t sign up for one of the profitable ones that they conducted.

At the present time, the only broker who offers an Auto-Trade program honoring Terry's Tips Trade Alerts is a Chicago broker with the unlikely name of thinkorswim, Inc by TD Ameritrade.  Several other brokers have asked us to be added to their list of investment newsletter providers, but we have not accepted their offers because we have been totally satisfied with thinkorswim, Inc by TD Ameritrade.  In fact, our experience has taught us that there is not a single reason why any options investor should use a different broker for their Auto-Trade program.  Here are some of the reasons:

  • Extremely options-friendly
  • Best (free) options software available anywhere
  • Low commissions.
  • Choice of several commission plans depending whether your average option order quantities are small or large (10 or more).
  • Great personal service.  For example, they will set up one of our portfolios on any Wednesday for you other than during the monthly expiration week so you don’t have to place all the trades yourself.
  • No extra charge for orders placed through a broker
  • And best of all – they get excellent executions.  Barron’s named them the best broker for executing option orders, and our experience has been the same.  At one time, other brokers had Auto-Trade for Terry’s Tips, and many times we discovered that the thinkorswim, Inc by TD Ameritrade brokers had executed far better prices than the other brokers received, saving subscribers many dollars (often enough to pay for their entire Terry’s Tips Premium Service subscription price).

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Terry's Tips Stock Options Trading Blog

February 20, 2017

Using Investors Business Daily to Create an Options Strategy

Today I would like to share an idea that we are using in one of our Terry's Tips’ portfolios. We started this portfolio on January 4, 2017, and in its first six weeks, the portfolio has gained 30% after commissions. That works out to about 250% for the whole year if we can maintain that average gain (we probably can’t keep it up, but it sure is a good start, and a positive endorsement for the basic idea).

Terry

Using Investors Business Daily to Create an Options Strategy

IBD publishes a list which it calls its Top 50. It consists of companies which have a positive momentum. Our idea is to check this list for companies that we particularly like for fundamental reasons besides the momentum factor. Once we have picked a few favorites, we make a bet using options that will make a nice gain if the stock stays at least flat for the next 45 – 60 days. In most cases, the stock can actually fall a little bit and we will still make our maximum gain.

The first 4 companies we selected from IBD’s Top50 list were . . .

February 5, 2017

An Update on Our Last Trade and a New One on AAPL

About a month ago, I suggested an options spread on Aetna (AET) that made a profit of 23% after commissions in two weeks. It worked out as we had hoped. Then, two weeks ago, I suggested another play on AET which would make 40% in two weeks (ending last Friday) if AET ended up at any price between $113 and $131. The stock ended up at $122.50 on Friday, and those of us who made this trade are celebrating out 40% victory. (See the last blog post for the details on this trade.)

Today, I am suggesting a similar trade on Apple (AAPL). It offers a lower potential gain, but the stock can fall in price by about $9 and the gain will still come your way.

Terry

An Update on Our Last Trade and a New One on AAPL

This trade on APPL will only yield about 30% after commissions, and you have to wait six months to get it, but the stock can fall over $8 during that time, and you would still make your 30%.

January 20, 2017

Another Interesting Short-Term Play on Aetna (AET)

Ten days ago, I sent you a note showing how you could make 23% on an options spread on Aetna (AET) if the stock closed at any price above $118 today. Back then, it was trading at $122.67. The day is not yet over right now, but AET is trading at $122 with an hour to go until closing, so it seems safe to say that the 23% will be enjoyed by everyone who placed the trade.

Today, I would like to suggest another trade on AET that will end two weeks from today. It will make 40% on . . .

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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