from the desk of Dr. Terry F Allen

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Terry's Tips Stock Options Trading Blog

Now Might Be the Perfect Time to Make This Volatility Trade

August 25th, 2015

Today I would like to pass along a trade I just made. It has a chance of making 50% if the stock stays flat or moves moderately higher over the next ten days. I want to share it with you just in case you might like to try it yourself (with some money you could afford to lose – we’re talking about $670 here, per contract).

Terry

Now Might Be the Perfect Time to Make This Volatility Trade

The market is going crazy. VIX, the so-called Fear Index, skyrocketed to 40 yesterday, something it hasn’t done for over 2 years. It has fallen to about 30 today, and if history is any indicator, it is headed for the 12 – 14 level where it has hung out for . . .

How to Fine-Tune Market Risk With Weekly Options

August 17th, 2015

This week I would like to share an article word-for-word which I sent to Insiders this week. It is a mega-view commentary on the basic options strategy we conduct at Terry’s Tips. The report includes two tactics that we have been using quite successfully to adjust our risk level each week using weekly options.

If you are already trading options, these tactic ideas might make a huge difference to your results. If you are not currently trading options, the ideas will probably not make much sense, but you might enjoy seeing the results we are having with the actual portfolios we are carrying out for our subscribers.

Terry

How to Fine-Tune Market Risk With Weekly Options

“Bernie Madoff attracted hundreds of millions of dollars by promising investors 12% a year (consistently, year after year). Most of our portfolios achieve triple that . . .

3 Options Strategies for a Flat Market

August 6th, 2015

Before I delve into this week’s option idea I would like to tell you a little bit about the actual option portfolios that are carried out for Insiders at Terry’s Tips. We have 11 different portfolios which use a variety of underlying stocks or ETPs (Exchange Traded Products). Eight of the 11 portfolios can be traded through Auto-Trade at thinkorswim (so you can follow a portfolio and never have to make a trade on your own). The 3 portfolios that cannot be Auto-Traded are simple to do on your own (usually only one trade needs to be made for an entire year).

Ten of our 11 portfolios are ahead of their starting investment, some dramatically ahead. The only losing portfolio is based on Alibaba (BABA) – it was a bet on the Chinese market and the stock is down over 30% since we started the portfolio at the beginning of this year (our loss is much greater). The best portfolio for 2015 is up 55% so far and will make exactly 91% if the three underlyings (AAPL, SPY, and GOOG) remain where they presently are (or move higher). GOOG could fall by $150 and that spread would still make 100% for the year.

Another portfolio is up 44% for 2015 and is guaranteed to make 52% for the year even if the underlying (SVXY) falls by 50% between now and the end of the year. A portfolio based on Costco (COST) was started 25 months ago and is ahead more than 100% while the stock rose 23% – our portfolio outperformed the stock by better than 4 times. This is a typical ratio – portfolios based on Nike (NKE) and Starbucks (SBUX) have performed similarly.

We are proud of our portfolio performance and hope you will consider taking a look at how they are set up and perform in the future.

Terry

3 Options Strategies for a Flat Market

“Thinking is the hardest work there is, which is probably the reason why so few engage in it.” – Henry Ford

If you think the market will be flat for the next month, there are several options strategies you might employ. In each . . .

Long-Term Options Strategies For Companies You Like

July 30th, 2015

Today I would like to share an article I sent to paying subscribers two months ago. It describes an 8-month options play on Facebook (FB), a company that seems to be doing quite well these days. The spread is a vertical credit put spread which I like because once you place it, you don’t have to make any closing trades (both options hopefully expire worthless, all automatically) as long as the stock is any higher than a pre-determined price. It is actually quite simple to do, so please don’t tune out because its name sounds so confusing.

Terry

Here is the exact article sent out on April 24, 2015:

“A Long-Term Play on Facebook (FB): Last week in my charitable trust account I made a long-term bet that FB would not fall dramatically from here during the balance of 2015. It seems to be a good company that is figuring out how . . .

5 Option Strategies if you Think the Market is Headed Lower

June 27th, 2015

A subscriber wrote in and asked what he should do if he thought the market would be 6% lower by the end of September. I thought about his question a little bit, and decided to share my thoughts with you, just in case you have similar feelings at some time along the way.

Terry

5 Option Strategies if you Think the Market is Headed Lower

We will use the S&P 500 tracking stock, SPY, as a proxy for the market. As I write this, SPY is trading just below $210. If it were to fall by 6% by the end of September (3 months from now), it would be trading about $197 at that time. The prices for the possible investments listed below are slightly more costly than the mid-point between the bid and ask prices for the options or the option spreads, and include . . .

Why Option Prices are Often Different

June 1st, 2015

This week I would like to discuss why stock option prices are low in some weeks and high in others, and how option spread prices also differ over time. If you ever decide to become an active option investor, you should understand those kinds of important details.

Terry

Why Option Prices are Often Different

The wild card in option prices is implied volatility (IV). When IV is high, option prices are higher than they are when IV is lower. IV is determined by the market’s assessment of how volatile the market will be at certain times. A few generalizations can be made:

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

May 28th, 2015

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,

How to Make Gains in a Down Market With Calendar Spreads

May 14th, 2015

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 . . .

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

April 29th, 2015

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 , , ,

Why Calendar Spreads Are So Much Better Than Buying Stock

April 22nd, 2015

One of the great mysteries in the investment world (at least to me, an admitted options nut) is why anyone would buy stock in a company they really like when they could dramatically increase their expected returns with a simple stock options strategy instead. Of course, buying options is a little more complicated and takes a little extra work, but if you could make two or three times (or more) on your investment, wouldn’t that little extra effort be more than worth it? Apparently not, since most people take the lazy way out and just buy the stock.

Today I will try to persuade you to give stock options a try. I will show you exactly what I am doing in one of my Terry’s Tips portfolios while trading one of my favorite stocks.

Terry

Why Calendar Spreads Are So Much Better Than Buying Stock

I like just about everything about Costco. I like to shop there. I buy wine by the case, paying far less than my local wine store (I am not alone – Costco is the largest retailer . . .

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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