from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

1-800-803-4595

Posts Tagged ‘SPY’

Consider Amazon.com (AMZN) Following the Technical Breakout

Sunday, March 24th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Consider Amazon.com (AMZN) Following the Technical Breakout

AMZN recently made a significant technical break that stands to have bullish repercussions, take a look at what these two analysts have to say about it – Amazon’s Breakout May Fuel A Return To Its All-Time Highs and Amazon Stock Is Finally Breaking Out.

There are several ways to view the AMZN breakout, the above two articles include several of the variations.  The one technical break that most are probably watching is the push above the stocks 200 daily moving average.  The below chart shows that price stalled out near it three times this year prior to the technical break last week.  A declining trendline originating from a high posted in October is also in play.  In the current pullback, strong support is seen at the moving average followed by the previously broken descending trendline which is found slightly below the indicator.

AMZN Chart March 2019

AMZN Chart March 2019

If you agree there’s further upside ahead for AMZN, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open AMZN 26APR19 1760 Puts (AMZN190426P1760)
Sell To Open AMZN 26APR19 1762.5 Puts (AMZN190426P1762.5) for a credit of $0.98 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $1765.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $95.50 and your broker would charge a $250 maintenance fee, making your investment $154.50 ($250 – $95.50).  If AMZN closes at any price above $1762.5 on April 26, both options would expire worthless, and your return on the spread would be 62% (707% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates March 21, 2019

IBD Underlying Updates March 21, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Will Regeneron Pharmaceuticals Continue to Outperform Its Sector?

Sunday, February 24th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.  The actual Terry’s Tips portfolio that trades these ideas of the week has gained 148% in the first two months of 2019.  Of course, past results are not always duplicated in the future, but we like our chances here.

Terry

Will Regeneron Pharmaceuticals Continue to Outperform Its Sector?

Regeneron Pharmaceuticals (REGN) has been a long-term performer, see what these two analysts have to say about the company moving forward – Why I Like Regeneron Pharmaceuticals, Inc. and Is Regeneron Pharmaceuticals Stock Outpacing Its Medical Peers This Year?

The main technical appeal to REGN is its ability to hold above a horizontal level near $410 that held the stock lower late last year.  The level is now seen as strong support and recent price action seems to support that as a dip following their recent earnings report was bought up near the level.  There is some confluence at the price point as the 50-Monthly moving average is slightly above it.  The stock trades within a rising trend channel that originates from a low in May last year and the upper bound of the channel currently falls around $450-$460.

REGN Chart February 2019

REGN Chart February 2019

*source Tradingview.com

If you agree there’s further upside ahead for REGN, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open REGN 29MAR19 417.5 Puts (REGN190329P417.5)
Sell To Open REGN 29MAR19 420 Puts (REGN190329P420) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when REGN was trading near $423.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $115.50 and your broker would charge a $250 maintenance fee, making your investment $134.50 ($250 – $115.50).  If REGN closes at any price above $420 on March 29, both options would expire worthless, and your return on the spread would be 86% (981% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates February 21, 2019

IBD Underlying Updates February 21, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Can Microchip Technology (MCHP) Maintain its Post-Earnings Momentum?

Sunday, February 10th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum. Our actual portfolio carried out at Terry’s Tips which trades these weekly ideas has gained 114% in the first five weeks of 2019.  This portfolio also made over 100% in 2018 and we withdrew the starting investment amount so that we are playing entirely with profits at this time.  Of course, there is no certainty that we can duplicate this success in the future, but we feel pretty good about our prospects.

Terry

Can Microchip Technology (MCHP) Maintain its Post-Earnings Momentum?

Microchip Technology saw its stock price rally just over 10% prior to pulling back as investor optimism grew following their earnings report in the past week.  Just to be clear, the report was not as upbeat as expected.  Actually, the stock had turned down initially, but it was a prediction from the company Chief Executive that caused investors to change their view and start buying.  It’s a rather interesting turn of events and the following two articles explain why the markets have put so much weight to his prediction, and why the stock may continue to rise from here – Microchip’s stock soars after CEO calls for a bottom, and he’s been right before and Microchip: A Bottom Is Possibly In.

 

The push higher following earnings led to a signifcant technical break as the stock was pressed against a confluence of resistance prior to it.  Resistance comes from the 200-day moving average as well as a declining trendline drawn from the June top.  The stock price has pulled back a bit from horizontal resistance found at $89.20 that was a prior low and prior resistance following a gap down last summer.  Support is found just above $85.  In the even the support level does not hold, stronger support is found at the prior breakout point.  Considering the significance of the technical break, bulls are likely to defend any dips in the near-term.

MCHP Chart February 2019

MCHP Chart February 2019

*source Tradingview.com

If you agree there’s further upside ahead for MCHP, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open MCHP 15MAR19 85.00 Puts (MCHP190315P85.00)
Sell To Open MCHP 15MAR19 87.50 Puts (MCHP190315P87.50) for a credit of $1.10 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MCHP was trading near $87.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $355.50 and your broker would charge a $1000 maintenance fee, making your investment $644.50 ($1000 – $355.50).  If MCHP closes at any price above $87.50 on March 15, both options would expire worthless, and your return on the spread would be 55% (627% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates February 7, 2019

IBD Underlying Updates February 7, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

PayPal (PYPL) Dips After Earnings, Is it a Buy?

Sunday, February 3rd, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

PayPal (PYPL) Dips After Earnings, Is it a Buy?

After briefly piercing to record highs, PayPal stock declined following its earnings report in the past week.  Is the dip a buying opportunity? The following article provides some solid arguments for why it is – Buy the Dip in Paypal Stock Because $100 Is the Next Stop.  Also an article recently published on The Motley Fool makes a compelling argument for growth on the back of rising popularity and potential for PayPal’s app Venmo.  In the article, the company’s CEO was quoted as saying the P2P payment app could potentially surpass PayPal’s payment system in profitability – The Big News in PayPal’s Fourth-Quarter Update.

Aside from chart patterns, a significant appeal to PYPL is that it touched record highs this month, fully erasing the prior decline.  Not only that, it was the first IBD Top 50 listed stock to do so while most have only recovered a part of the fall that took place late in 2018.  In this context, it is certainly an outperformer.  Support is found at $87.55 as a horizontal level there has previously acted as both support and resistance dating back to June last year.  Note that this level was a major barrier in the fourth quarter.  On a weekly chart, the 20-week moving average was the equivalent barrier for Q4.  It currently falls near $85.50 to provide additional support in the event of further near-term downside.  Just above it, the 50-day moving average is found, currently at $86.14.

PYPL Chartl February 2019

PYPL Chartl February 2019

*source Tradingview.com

If you agree there’s further upside ahead for PYPL, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open PYPL 15MAR19 87.5 Puts (PYPL190315P87.5)
Sell To Open PYPL 15MAR19 90 Puts (PYPL190315P90) for a credit of $0.95 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when PYPL was trading near $90.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $92.50 and your broker would charge a $250 maintenance fee, making your investment $157.50 ($250 – $92.50).  If PYPL closes at any price above $90 on March 15, both options would expire worthless, and your return on the spread would be 59% (552% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates February 1, 2019

IBD Underlying Updates February 1, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Can CyberArk Software (CYBR) Continue the Upside Momentum?

Sunday, January 13th, 2019

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Can CyberArk Software (CYBR) Continue the Upside Momentum?

The Investor’s Business Daily recently published an article picking out CYBR as one of the 5 best companies that stand to gain as the market rallies, view the full article here.  As well, take a look at this article published on Zacks that details CYBR as an outperformer among its peers.

From a technical perspective, the main appeal to CyberArk’s stock is that it’s trading within a rising trend channel while a majority of stocks remain within a declining trend channel, which is an indication of strength.  In fact, looking at the CYBR chart alone, it would not be apparent that the broader markets had such a volatile decline in the last two months of 2018.  The stock price ended last week near highs and looks to be threatening a break above the December top.

CYBR Chart January 2019

CYBR Chart January 2019

*source Tradingview.com

If you agree there’s further upside ahead for CYBR, consider this trade which is a bet that the stock will continue to advance over the next four weeks, at least a little bit.

Buy To Open CYBR 8FEB19 75 Puts (CYBR19028P75)
Sell To Open CYBR 8FEB19 78 Puts (CYBR19028P78) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CYBR was trading near $80.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $130.50 and your broker would charge a $300 maintenance fee, making your investment $169.50 ($300 – $130.50).  If CYBR closes at any price above $78 on February 8, both options would expire worthless, and your return on the spread would be 77% (1124% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates January 10, 2019

IBD Underlying Updates January 10, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Will Medpace Holdings (MEDP) Break to New All Time Highs?

Monday, December 10th, 2018

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Terry

Will Medpace Holdings (MEDP) Break to New All Time Highs?

Medpace Holdings has been getting some media attention as of late, take a look at these two articles to see what analysts are saying about this stock – MEDP vs PRAH: Which Stock Should Value Investors Buy Now? and Bullish Trend Signal for Medpace Holdings.

The technical appeal in MEDP is it’s outperformance compared to the broader markets as well as some of the other stocks on the IBD Top 50 list.  MEDP has had a pickup in upside momentum since late October which seems to suggest it has resumed it’s uptrend following a correction.  In the past week, the stock saw some sellers near the $64 price point which resulted in a decline towards its 20-day moving average.  A break of $64 would have the stock trading at all time highs.  The stock appears to be well supported here with further support slightly below the 20-day moving average at $55 which was a level that held it higher after the gap up in late July.  As well, there is a rising trendline near the horizontal level that is drawn by connecting the October and November low

MEDP Chart December 2018

MEDP Chart December 2018

*source Tradingview.com

If you agree there’s further upside ahead for MEDP, consider this trade which is a bet that the stock will continue to advance over the next six weeks, or at least not decline very much.

Buy To Open MEDP 18JAN19 50 Puts (MEDP190118P50)
Sell To Open MEDP 18JAN19 55 Puts (MEDP190118P55) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when MEDP was trading near $58.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $2.50 per spread (the rate charged by thinkorswim for Terry’s Tips’ subscribers).  Each contract would then yield $130.50 and your broker would charge a $500 maintenance fee, making your investment $369.50 ($500 – $130.50).  If MEDP closes at any price above $55 on January 18, both options would expire worthless, and your return on the spread would be 35% (312% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates December 6, 2018

IBD Underlying Updates December 6, 2018

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Black Friday Special Offer Lowest Price Ever

Wednesday, November 8th, 2017

Learn the Exact Details of the Options Strategies That Have Resulted in Average Gains of 120% so far in 2017…

…at a Near-Give-Away Price Never Offered Before

Terry’s Tips is an options newsletter that has been around for 16 years.  Over that time period, we have developed and refined several options strategies that are enjoying unprecedented success.

We carry out 10 separate options portfolios for our subscribers to follow on their own with our favorite brokerage tastyworks or by having the trades executed automatically through thinkorswim’s Auto-Trade program.

Each portfolio is carried out in a separate account available for everyone to see (we don’t just publicize the most successful ones).  Each portfolio employs a specific pre-defined strategy using one or more underlying stocks or ETPs (Exchange Traded Products).   Unlike other options newsletters, we include the actual commissions in all our results.

The composite average gain for 2017 for our 10 portfolios through the first week of November was 120%.  Subscribers who mirrored all 10 of our portfolios would have invested $48,600 in January.  Those portfolios were worth $107,103 last week.  But of course, you can mirror just the portfolios that you like or choose.

We have made these gains with various strategies including Credit Spreads and Selling Naked Puts.  But for the last 16 years our flagship strategy is what we call the 10K Strategy.  It involves selling short-term options on individual stocks and using longer-term (or LEAPS) as collateral.  It is sort of like writing calls, except that you don’t have to put up all that cash to buy 100 or 1000 shares of the stock.  The 10K Strategy is sort of like writing calls on steroids.  It is an amazingly simple strategy that really works with the one proviso, that you select a stock that stays flat or moves higher over time.

How else in today’s investment world of near-zero dividend yields can you expect to make these kinds of returns?  Find out exactly how to do it by buying yourself a Black Friday gift for yourself and your family.  They will love you for it.

Lowest Subscription Price Ever:  As a Black Friday special, we are offering the lowest subscription price that we have ever offered – our full package, including:

    • Over 10 case study reports
    • my 60+ page White Paper – which explains my favorite option strategies in detail and shows you exactly how to carry them out on your own
    • a 14-day options tutorial program which will give you a solid background on options trading
    • and two months of our weekly newsletter full of tradable option ideas.

Here is a sampling of the additional free reports you will get with a subscription to Terry’s Tips:

How We Made 100% on Apple

VXX – The Holy Grail for the 10K Strategy

Using the Vertical Credit Put Spread

Eight Consecutive Earnings Play Wins and What We Learned

An Options Strategy That Could Realistically Make 40% a Month

Two 2015 Case Studies of Option Portfolios – COST and SBUX

It is hard to place a value on these special reports – if they helped you improve your investment results for the rest of your life, how much might they be worth to you?  Not exactly priceless, but maybe getting close to it.

For this lowest-price-ever $37.95 offer, click here, enter Special Code BF117 (or BF117P for Premium Service – $77.95).

If you are ready to commit for a longer time period, you can save even more with our half-price offer on our Premium service for an entire year.  This special offer includes everything in our basic service, and in addition, real-time trade alerts and full access to all 9 of our current actual portfolios so that you can Auto-Trade or follow any or all of them.  We have several levels of our Premium service, but this is the maximum level since it includes full access to all nine portfolios.  A year’s subscription to this maximum level would cost $1080.  With this half-price offer, the cost for a full year would be only $540.  Use the Special Code MAX17P.

This is a time-limited offer.  You must order by Monday, November 27, 2017.  That’s when the half-price offer expires, and you will have to go back to the same old investment strategy that you have had limited success with for so long (if you are like most investors).

This is the perfect time to give you and your family the perfect Thanksgiving and Black Friday gift that is designed to deliver higher financial returns for the rest of your investing life. Just imagine sitting around at the family get together and explaining to your favorite know it all buy and hold uncle about Vertical Bull Put Spreads as his eyes glaze over.

I look forward to helping you get the next investment cycle (ride the holiday retail economy cash injection) started off right by sharing this valuable investment information with you at the lowest price ever. It may take you a little homework, but I am sure you will end up thinking it was well worth the investment.

Happy trading.

Terry

P.S.  If you would have any questions about this offer or Terry’s Tips, please call Seth Allen, our Senior Vice President at 800-803-4595.  Or make this investment in yourself at the lowest price ever offered in our 16 years of publication – only $37.95 for our entire package.  Get it here using Special Code BF117 (or BF117P for Premium Service – $79.95).   Do it today, before you forget and lose out.  This offer expires on Monday, November 27, 2016.

P.P.S. Use special code MAX17P to get the ultimate Premium Special for $540 (normally $1080)

How to Make 40% a Year Betting on the Market, Even if it Doesn’t Go Up

Monday, December 19th, 2016

This is the time of the year when everyone is looking ahead to the New Year. The preponderance of economists and analysts who have published their thoughts about 2017 seem to believe that Trump’s first year in the oval office will be good for the economy and the market, but not great.

Today I would like to share an option trade I have made in my personal account which will earn me a 40% profit next year if these folks are correct in their prognostications.

 

Terry

How to Make 40% a Year Betting on the Market, Even if it Doesn’t Go Up

Since most people are pretty bad at picking stocks that will go higher (even though they almost universally believe otherwise), many advisors recommend the best way to invest your money is to buy the entire market instead of any individual stock.  The easiest way to do that is to buy shares of SPY, the S&P 500 tracking stock.

SPY has had quite a run of going up every year, 7 years in a row.  This year, it has gone up about 9% and last year it gained about 5%.  Since so many “experts” believe the market has at least one more year of going up, what kind of investment could be made at this time?

Since I am an options nut, I will be keeping a lot of my investment money in cash (or cash equivalents) and spend a smaller amount in an option play that could earn spectacular profits if the market (SPY) just manages to be flat or go up by any amount in 2017.

OK, it isn’t quite a calendar year, but it starts now, or whenever you make the trade, and January 19, 2017.  That’s about 13 months of waiting for my 40% to come home.

Here is the trade I made last week when SPY was trading about $225:

Buy to Open 1 SPY 19Jan18 220 put (SPY180119P220)

Sell to Open 1 SPY 19Jan18 225 put (SPY180119P225) for a credit of $1.95  (selling a vertical)

This is called a vertical put (bullish) credit spread.  You collect $195 less $2.50 commissions, or $192.50 and there will be a $500 maintenance requirement by your broker.  You do not pay interest on this amount, but you have to leave that much untouched in your account until the options expire.  The $500 is reduced by $192.50 to calculate your net investment (and maximum loss if SPY closes below $220 on January 19, 2018.  That net investment is $307.50.

If SPY is at any price higher than $225 on that date in January, both options will expire worthless and you will keep your $192.50.  That works out to a profit of 62% on your investment.

If the stock ends up below $225, you will have to buy back the 225 put for whatever it is trading for.  If SPY is below $220, you don’t have to do anything, but the broker will take the $500 you have set aside (less the $192.50 you collected) and you will have suffered a loss.

I know I said 40% in the headline, and this spread makes 62% if SPY is the same or any higher.  An alternative investment would be to lower the strikes of the above spread and do something like this:

Buy to Open 1 SPY 19Jan18 210 put (SPY180119P210)

Sell to Open 1 SPY 19Jan18 215 put (SPY180119P215) for a credit of $1.50  (selling a vertical)

This spread would get you $147.50 after commissions, involve an investment of $352.50, and would earn a profit of 42% if SPY ends up at any price above $215.  It could fall $10 from its present price over the year and you would still earn over 40%.

Many people will not make either of these trades because they could possibly lose their entire investment.  Yet these same people often buy puts or calls with the hope of making a killing, and over 70% of the time, they lose the entire amount.  Contrast that experience to the fact that the spreads I have suggested would have made over 60% every year for the last seven years without a single loss.  I doubt that anyone who buys puts or calls can boast of this kind of record.

Options involve risk, as any investment does, and should only be used with money you can truly afford to lose.

Happy trading.

Terry

 

Halloween Special Expires at Midnight Tonight

Monday, October 31st, 2016

Halloween Special Expires at Midnight Tonight

I want to send you a copy of the October 29, 2016 Saturday Report, the weekly email sent to paying subscribers to Terry’s Tips.  This report details how our 13 actual portfolios perform each week.    Last week was a down one for the market (SPY lost 0.7%), and many of our portfolios experienced a similar loss.  Others did considerably better.

The portfolio based on Johnson and Johnson (JNJ) gained 25% while the stock rose 1.7%.  The portfolio based on Facebook (FB) gained 8.7% even though FB fell by 0.6% last week.  This portfolio was started with $6000 one year and three weeks ago, and is now worth $13,449, a gain of 124%.

One of our portfolios invests in companies which are about to announce earnings, and closes out the positions on the Friday after the announcement.  Last week, we closed out our spreads in Mastercard (MA) which had been put on only a week and a half earlier.  We enjoyed a gain of 34.3% (after commissions, as is the case for all of these portfolios).

Finally, we have a portfolio that is designed as protection against a market crash or correction.  While SPY fell only 0.6%, this bearish portfolio picked up 13.6% (admittedly, this was an unusually positive result which rarely occurs to this extent, but sometimes we are a little lucky).

Watching how these portfolios unfold over time in the Saturday Report is a wonderful (and easy) way to learn the intricacies of option trading.  You can get started today by coming on board at our half-off Halloween Special which expires at midnight tonight. I will personally send you the October 29th Saturday Report so you can start immediately.

Most of these portfolios employ what we call the 10K Strategy.  It involves selling short-term options on individual stocks and using longer-term (or LEAPS) as collateral.  It is sort of like writing calls, except that you don’t have to put up all that cash to buy 100 or 1000 shares of the stock.  The 10K Strategy is sort of like writing calls on steroids.  It is an amazingly simple strategy that really works with the one proviso that you select a stock that stays flat or moves higher over time.

Lowest Subscription Price Ever

As a Halloween special, we are offering the lowest subscription price than we have ever offered – our full package, including several valuable case study reports, my White Paper, which explains my favorite option strategies in detail, and shows you exactly how to carry them out on your own, a 14-day options tutorial program which will give you a solid background on option trading, and two months of our Saturday Reports full of tradable option ideas.  All this for a one-time fee of $39.95, less than half the cost of the White Paper alone ($79.95).

For this lowest-price-ever $39.95 offer, click here, enter Special Code HWN16 (or HWN16P for Premium Service – $79.95).

 If you are ready to commit for a longer time period, you can save even more with our half-price offer on our Premium service for an entire year.  This special offer includes everything in our basic service, and in addition, real-time trade alerts and full access to all of our portfolios so that you can Auto-Trade or follow any or all of them.  We have several levels of our Premium service, but this is the maximum level since it includes full access to all nine portfolios which are available for Auto-Trade.  A year’s subscription to this maximum level would cost $1080.  With this half-price offer, the cost for a full year would be only $540.  Use the Special Code MAX16P.

 This is a time-limited offer.  You must order by midnight tonight, October 31, 2016.  That’s when the half-price offer expires, and you will have to go back to the same old investment strategy that you have had limited success with for so long (if you are like most investors).

This is the perfect time to give you and your family the perfect Halloween treat that is designed to deliver higher financial returns for the rest of your investing life.

I look forward to helping you survive Halloween by sharing this valuable investment information with you at the lowest price ever. It may take you a little homework, but I am sure you will end up thinking it was well worth the investment.

Happy trading.

Terry

P.S.  If you would have any questions about this offer or Terry’s Tips, please call Seth Allen, our Senior Vice President at 800-803-4595.  Or make this investment in yourself at the lowest price ever offered in our 15 years of publication – only $39.95 for our entire package.  Get it here using Special Code HWN16 (or HWN16P for Premium Service – $79.95).   Do it today, before you forget and lose out.  This offer expires at midnight tonight, October 31, 2016.

 

 

Calendar Spreads Tweak #4

Wednesday, September 21st, 2016

Today I would like to discuss how you can use calendar spreads for a short-term strategy based around the date when a stock goes ex-dividend. I will tell you exactly how I used this strategy a week ago when SPY paid its quarterly dividend.

Terry

Calendar Spreads Tweak #4

Four times a year, SPY pays a dividend to owners of record on the third Friday of March, June, September, and December. The current dividend is about $1.09. Each of these events presents a unique opportunity to make some money by buying calendar spreads using puts to take advantage of the huge time premium in the puts in the days leading up to the dividend day.

Since the stock goes down by the amount of the dividend on the ex-dividend day, the option market prices the amount of the dividend into the option prices. Check out the situation for SPY on Wednesday, September 14, 2016, two days before an expected $1.09 dividend would be payable. At the time of these prices, SPY was trading just about $213.70.

Facebook Bid Ask Puts Calls Sept 2016

Facebook Bid Ask Puts Calls Sept 2016

Note that the close-to-the-money options at the 213.5 strike show a bid of $1.11 for calls and $1.84 for puts. The slightly out-of-the-money put options are trading for nearly double the prices for those same distance-out calls. The market has priced in the fact that the stock will fall by the amount of the dividend on the ex-dividend day. In this case, that day is Friday.

SPY closed at $215.28 on Thursday. Friday’s closing price was $213.37, which is $1.91 lower. However, the change for the day was indicated as -$.82. The difference ($1.09) was the size of the dividend.

On Wednesday and Thursday, I decided to sell some of those puts that had such large premiums in them to see if there might be some opportunity there. While SPY was trading in the $213 to $216 range, I bought put calendar spreads at the 214.5, 214, 213.5, and 213 strikes, buying 21Oct16 puts at the even-strike numbers and 19Oct16 puts for the strikes ending in .5 (only even-number strikes are offered in the regular Friday 21Oct16 options). Obviously, I sold the 16Sep16 puts in each calendar spread.

Note: On August 30th, the CBOE offered a new series of SPY options that expire on Wednesday rather than Friday. The obvious reason for this offering involves the dividend situation. Investors who write calls against their SPY stock are in a real bind when they sell calls that expire on an ex-dividend Friday. First, there is very little time premium in those calls. Second, there is a serious risk that the call will be exercised by the holder to take the stock and capture the dividend. If the owner of SPY sold the series that expired on Wednesday rather than Friday, the potential problem would be avoided.

I paid an average of $2.49 including commissions for the four calendar spreads and sold them on Friday for an average of $2.88 after commissions. I sold every spread for more money that it cost (including commissions). My net gain for the two days of trading was just over 15% after commissions.

The stock fell $.82 (after accounting for the $1.09 dividend). If it had gone up by that amount, I expect that my 15% gain would also have been there. It is unclear if the gains would have been there if SPY had made a big move, say $2 or more in either direction on Friday. My rough calculations showed that there would still be a profit, but it would be less than 15%. Single-day moves of more than $2 are a little unusual, however, so it might not be much to be concerned about.

Bottom line, I am delighted with the 15% gain, and will probably try it again in three months (at the December expiration). In this world of near-zero interest rates, many investors would be happy with 15% for an entire year. I collected mine in just two days.

Trading SPY options is particularly easy because of the extreme liquidity of those options. In most cases, I was able to get an execution at the mid-point price of the calendar spread bid-ask range. I never paid $.01 more or received more than $.01 less than the mid-point price when trading these calendar spreads.

While liquidity is not as great in most options markets, it might be interesting to try this same strategy with other dividend-payers such as JNJ where the dividend is also over $1.00. I regularly share these kinds of trading opportunities with Terry’s Tips Insiders so that they can follow along in their own accounts if they wish.

Happy trading.

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.

Order Now

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