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Terry's Tips Stock Options Trading Blog

$20 Spread Investment Idea – a Bet on Oil

April 14th, 2015

This week I would like to share an option spread idea which will cost you only $20 to try (plus commission). Of course, it you like the idea, you could buy a hundred or more of them like I did, or you could just get your options toe wet at a cost of a decent lunch (skip lunch and take a walk instead – it could improve both your physical and financial health).

The bet requires you to take a stab at what the price of oil might do in the next few weeks. Your odds of winning are surely better than placing a bet on a fantasy baseball team, and it could be as much fun. Read on.

Terry

$20 Spread Investment Idea – a Bet on Oil

I continue to investigate investment opportunities in USO, both . . .

Update on Oil Play Designed to Make 25% in One Month

April 3rd, 2015

About a month ago I sent out a strategy we were using to capitalize on the price of oil falling further (as many analysts, including those at Goldman, Citi, and Barclays, were predicting). We set up a small demonstration portfolio which had $2910 to start, and bought calendar spreads at the 18, 17, and 16 strikes when USO was trading at $18.45.

When the price of oil did retreat further, USO fell to about $17, and we sold our calendar spreads at the 17 and 18 strikes and replaced them with calendar spreads at the 15 and 14 strikes. Since the strike prices of calendar spreads is what determines whether you are bullish or bearish on the stock, when we had all our calendar spreads at strikes below the stock price, we were extremely bearish.

Then the stock turned around and headed higher, taking away the gains we had made, and we were right back to where we started. Today we made a new start, and I would like to share our thinking at this time.

Terry

Update on Oil Play Designed to Make 25% in One Month

USO is an Exchange Traded Product (ETP) which is highly . . .

Trading Options Can be a Lifetime Learning Experience

March 23rd, 2015

Last week was a good one for the market. SPY rose 2.2%, a wonderful week. The actual options portfolios we carry out at Terry’s Tips had a stellar week as well. Nine of our ten portfolios gained at least 5%, and 3 of them gained over 33% in a single week.

Nike (NKE) announced blow-out earnings and the stock rose 6.4%. Our portfolio that trades NKE options gained 13.5%, double the increase in the stock price. This was far less than we usually do compared to stock price changes, however.

We have proved over and over that if you can find a stock that will increase if value, you can usually make 3 or 4 or more times as much with an options strategy as you could by simply buying the stock.

Of course, buying options is not quite so simple as buying stock. To do it right requires gaining some understanding that most people just don’t have the energy or willpower to learn.

Terry

Trading Options Can be a Lifetime Learning Experience

If the truth be known, investing in stocks is pretty much like playing checkers. Any . . .

Are Overbought-Oversold Indicators Reliable Predictors of Short-Term Market Performance – a 100-Week Backtest

March 12th, 2015

This week I would like to report on a study I recently made for Terry’s Tips paying subscribers. I checked out the validity of a popular way of predicting whether the short term market might be headed higher or lower. I think you will find that the results are astonishing.

Terry

Are Overbought-Oversold Indicators Reliable Predictors of Short-Term Market Performance – a 100-Week Backtest

One of the most popular indicators in many analysts’ toolbox is the overbought-oversold numbers generated by the current RSI.

I have never figured out how to get reliable information from reading charts, although many people apparently . . .

An Oil Play Designed to Make 25% in One Month

March 3rd, 2015

Bernie Madoff attracted billions of dollars because he said he had a system that would generate gains of 12% a year. For many investors, 12% must seem like a pretty good return. Options investors think differently. They prefer to have at least some of their investment capital in something that could conceivably make a far greater return.

Today I would like to discuss an investment I made this week in a demonstration (actual money on the line) portfolio for Terry’s Tips Insiders. It is designed to make about 25% in the next four weeks.

Terry

An Oil Play Designed to Make 25% in One Month

One of our favorite underlyings these days is USO, an ETP (Exchange Traded Product) which closely tracks the price of oil. If you have . . .

List of Options Which Trade After Hours (Until 4:15)

February 27th, 2015

I noticed that the value of some of our portfolios was changing after the market for the underlying stock had closed. Clearly, the value of the options was changing after the 4:00 EST close of trading. I did a Google search to find a list of options that traded after hours, and came up pretty empty. But now I have found the list, and will share it with you just in case you want to play for an extra 15 minutes after the close of trading each day.

Terry

List of Options Which Trade After Hours (Until 4:15)

Since option values are derived from the price of the underlying stock or ETP (Exchange Traded Product), once the underlying stops trading, there should be no reason for options to continue trading. However, more and more . . .

An Even Better Way to Play Oil With Options

February 10th, 2015

Yesterday I sent you a note describing an interesting way to make some serious money with options, betting that the price of oil will either stabilize or move higher from today’s low levels. Thanks to subscriber Thomas, there is a better underlying out there. Just in case you were planning to place the trades, I thought you should check this one out first.

Terry

An Even Better Way to Play Oil With Options

This is a re-write of yesterday’s letter, except the underlying is USO (another ETF) rather than OIH. The chart for USO is remarkably similar to that of OIH:

There is a distinct advantage to USO, however. The options are far more liquid . . .

How to Play Oil Prices With Options

February 8th, 2015

If you are anything like me, I have enjoyed filling up my car lately. It almost seems too good to be true. How long do you think gas prices will stay this low? I figure that the price is more likely to move higher from here than it is to move lower, but I could be wrong. It seems like a prudent bet would be that it won’t move much lower from here, and that the price of oil is more likely to stay the same or move higher over the next year. If either scenario (flat or up) is true, you can easily double your money using options. Today I will show you one way that might be accomplished.

Terry

How to Play Oil Prices With Options

If you want to bet on higher oil prices, you might consider . . .

How to Make 20% in one Month on Your Favorite Stock (Using Options)

January 22nd, 2015

This week I would like to show you the exact positions of one of the 9 portfolios we are currently carrying out for Insiders at Terry’s Tips. It involves one of my favorite places to shop, Costco, and its stock, COST. We expect to make just under 20% on this portfolio in the next four weeks, even if the stock does not go up a single penny. Welcome to the wonderful world of stock options.

Terry

How to Make 20% in one Month on Your Favorite Stock (Using Options)

The basic strategy that we carry out at Terry’s Tips is to buy longer-term options on stocks we like and sell shorter-term options against them. Since the decay rates of the shorter-term options is . . .

Try a Vertical Put Credit Spread on a Stock That You Like

January 8th, 2015

This week I would like to share my thoughts about the market for 2015, and also one of my favorite option strategies when I find a stock I really like. Whenever I find a stock I particularly like for one reason or another, rather than buy the stock outright, I use options to dramatically increase [...]

Making 36%

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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