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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

April 14, 2014

An Interesting Calendar Spread Trade Idea

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.

April 7, 2014

Using Puts vs. Calls for Calendar Spreads

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 . . .

March 10, 2014

How to Play War Rumors

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.

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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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Sign up for Dr. Terry F Allen’s free newsletter and get immediate access to his most current report on his stock option trading strategies.

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