Posts Tagged ‘William Tell’

Low Cost ($180) SPY Calendar Spread Which Might Double in One Week

Monday, October 3rd, 2011

Option prices are higher than they have been in several years.  Today I would like to suggest a way to capitalize on these high prices be selling some short-term premium.  You might double your money in a week.  

Maybe you would be unlucky and it would take two weeks to double your money (of course, there are no guarantees in the investment world, but this one looks pretty good to us). 

What I am hoping is that you try this little investment, and if you are successful, you use some of your gain to join Terry’s Tips where you can get a complete education on how to generate consistent gains which could far exceed conventional investments.

Timing is everything – you act soon, you can become a Terry’s Tips Insider for a special low price (see below).

Low Cost ($180) SPY Calendar Spread Which Might Double in One Week

For the past several weeks, SPY has fluctuated in a range between $112 and $120.  Right now it is resting very close to the lower end of that range.  To place the spread that I am suggesting, you first need to make your best bet as to where the stock will be trading at the close of business on Friday.

Your chances of picking the right strike price are about as good as picking the right horse in a horse race, but the good thing about the calendar spread is that if your horse comes close to winning (i.e., the stock closes not too far away from your strike price choice), you can also be a winner.

When you buy a calendar spread, the maximum gain comes when the stock ends up at precisely the same price as the strike price of your spread.  At that price, the short position expires worthless (or very near to it) and the long side will have more time premium than any other option in that expiration series.

Once you have made your best bet as to where the price of SPY will be next Friday, you would put this spread on placing this trade:

BTO (buy to open) 1 SPY Oct-11 115 call (SPY111022C115)
STO (sell to open) 1 SPY Oct1-11 115 call (SPY111007C115) for $1.80 (buying a calendar spread)

This sample is for the 115 strike (you might select a higher or lower strike).  If you select a strike of 112 or higher, we would recommend using calls, or if lower than 112, using puts, although mathematically it makes no difference.  At thinkorswim, Terry’s Tips subscribers would pay a $2.50 commission to place this spread.

The $1.80 price is what you would have had to pay last Friday.  It will probably be less than this if you place the trade today or tomorrow.

You will have two opportunities to get your investment back (and hopefully, more).  The first will come on Friday (October 7).  You will buy back the call you sold short and sell the next-week call at the same strike.  This is the trade you would make then:

BTC (buy to close) 1 SPY Oct1-11 115 call (SPY111007C115)
STO (sell to open) 1 SPY Oct2-11 115 call (SPY111014C115) for $  (selling a calendar spread)

At last Friday’s closing option prices, if the stock is trading between $113 and $116, you would be able to sell this spread for a minimum of $180.  You would have all your money back, and when you made this same trade a week later (on October 21), anything you received from the sale would be pure profit.

An alternative move would be to close out the original calendar spread on October 7 rather than rolling over for another week.  If the strike you selected was within $3 or $4 of the stock price on that day, you should be able to sell the spread at a profit.

This little option spread might be a way to get your feet wet in the options world, and you would learn a little about how calendar spreads work without having to wait very long to see the results.  The closer your selected strike price is to the stock price when the short options expire, the greater your return. 

We hope you will re-invest some of the gain you might make by taking advantage of our discounted price for new subscribers who come on board by October 11, 2011.  Here is that special offer:

iPhone 5 Introduction Offer: Apple will introduce iPhone 5 on October 4.  For the first time, Sprint will be able to sell an iPhone.  It could be a big deal for Apple, and all of us who are betting on their stock.

On April 29, 2010, Terry’s Tips set up an actual portfolio to show how an options portfolio could outperform a stock portfolio using the same stock.  We chose Apple (AAPL) as a stock that we thought would go up.  On the day we set up the portfolio, AAPL was trading at $277.

In the next nine months, AAPL rose 25% and our $5000 starting portfolio value had soared to $10,087 (after all commissions, of course), a gain of over 100%.  

Our options portfolio had outperformed the purchase of stock by a huge margin – gaining 4 times as much as the stock gained.  Of course, the stock has now gone even higher, and our $5000 portfolio recently surpassed the $12,000 level.
 
We have written up a special report which shows exactly how we gained over 100% with an options portfolio while the stock rose only 25%.  You could easily use this same strategy on any stock of your own choosing, and presumably do as well (assuming that you picked a stock that went higher).
 
This report is worth many times the price of the entire subscription by itself. Together with my White Paper, this report is a short and complete explanation of how you can use an options strategy to double your money if the stock goes up only 25%

If you sign up by October 11, one week after the iPhone 5 hits the shelves, we will discount our introductory package all the way down to $59.95, a full $20 lower than thousands of subscribers have paid. 

This is what you get:
 
1)   My 70+ page White Paper which explains my favorite option strategies in detail, including my 10 Trading Rules, and 20 companies to use with the ‘Lazy Way” Strategy, (which guarantees a 100% gain in 2 years if the  stock stays flat or goes up).
 
2)   2 FREE months of the Options Tutorial Program (a $49.90 value), which includes:
 
 - A 14-lesson tutorial on trading stock options which will give you a thorough understanding of trading stock options.
 - A weekly update of 8 actual portfolios so that you can follow their progress over time.
 - Specific trades for each portfolio emailed to you so you may mirror them in your own account.
 - Access to historical analytic reports and portfolio updates posted in the Insiders section of Terry’s Tips.
  - If you choose to continue after the 2 free months, do nothing, and you’ll be billed at a discounted rate of $19.95 per month.  
 
3)    A FREE special report – “How We Made 100% with Apple in 2010-11 While the Stock Rose only 25%.”

 
With this one-time offer, you will receive everything for only $59.95, less than the value of the White Paper alone. But you must order by October 11, 2011.   Click here – http://www.terrystips.com/order.php and enter Special Code iPhone5.  
 
Why wait?  Do it today!  You will learn a strategy that could pay you back many times over, and do it every year for the rest of your investing life.  

Terry

P.S. Receive the special free report entitled “How We Made 100% on Apple in 2010-11 While AAPL Rose Only 25%”  in addition to all the other benefits of a Terry’s Tips subscription for the discounted special price of only $59.95,  go to http://www.terrystips.com/order.php, and use Special Code iPhone5.

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Posted in AAPL, Last Minute Strategy, Monthly Options, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »

Carrying Out the Last Minute Strategy

Monday, August 1st, 2011

Last week was the worst week for the market in a year. Most investors are not happy campers. A few of our portfolios did quite well, however. Our bearish one gained, of course, but two others did well in spite of the crashing averages.

Last week we discussed our William Tell portfolio which is an options bet that AAPL will move higher. Last week, the stock fell slightly, but our William Tell portfolio gained 2.3%, once again demonstrating that an options portfolio can outperform the outright purchase of stock (see free report that explains it all below).

Our Last Minute portfolio gained 27% on the amount invested last week. This is the portfolio I would like to talk about today.

Terry

Carrying Out the Last Minute Strategy

We carry out one portfolio that is a little unusual in many respects.  It is entirely in cash until late in the day each Thursday.  At that point, we decide whether we expect that SPY will fluctuate by more or less than a dollar on Friday.  If there is an important report coming out on Friday (such as the government’s job report which is due next week on the 5th), history has shown that SPY is quite likely to move by a fairly large amount in one direction or the other.  Other weeks, when the stock has moved by a dollar or more for several days in a row, we would expect that level of volatility to continue on Friday (which often has the greatest volatility of the week).

If we expect the market (SPY) to move by more than a dollar on Friday, we buy straddles or strangles.  If we expect it to move by less than a dollar on Friday, we buy calendar spreads (the long side with only 8 days of remaining life and the short side with one day of remaining life).

Last Thursday, we had trouble deciding which way to go, and we decided to invest less than half our money.  Ironically, we could have selected either straddles or calendars and we would have made money last week.  Early in the day, the stock fell by almost $1.50, but it ended up falling only $.89 for the day.

We bought straddles, the Jul5-11 131 calls and Jul5-11 130 puts, paying $1.12 each.  We bought 20 straddles, investing $2240.  When the market tanked early in the morning, we sold those straddles for $1.47.  We made a gain of $607, or 27% for the day (after commissions).

This was the fourth consecutive week that the Last Minute portfolio has made a gain.  Over that time, we have gained a total of $2860 on an average investment of $3450.  That works out to 83% on the money at risk (per unit, and many subscribers invest in lots of units).

We also would have made a gain last week if we had guessed the stock would move less than a dollar on Friday.  In that case, since SPY was trading between $130 and $131, we would have bought calendar spreads at the 130 and 131 strikes (either puts or calls could have been used, but we typically would have bought put calendars at the 130 strike and call calendars at the 131 strike).

These two spreads would have made a gain if the net change in SPY for the day was less than a dollar.  It was, at $.89, so we couldn’t have gone wrong last week.

We are having a lot of fun with this Last Minute portfolio, and so far, it has been quite profitable as well.

By coming on the Terry’s Tips bandwagon, you can play along with us in the Last Minute portfolio as well as 7 other portfolios, including the William Tell that has done so well as AAPL has moved higher.

We have written a detailed report on how the actual William Tell portfolio gained over 100% in 2010-11 while the stock rose only 25%.  You will learn how you can use the Shoot Strategy on any other stock of your choosing as well.  You can get this special report free when you subscribe to the Terry’s Tips service for a price which is less than a dinner for two at a decent restaurant – only $79.95 for the whole enchilada, including:

1)    My 72-page White Paper which explains my favorite option strategies in detail, including Trading Rules for each, and 20 companies to use with the “Lazy Way” Strategy, (which guarantees a 100% gain in 2 years if the stock stays flat or goes up).

2)    2 FREE months of the Options Tutorial Program (a $49.90 value), which includes:
·    A 14-lesson tutorial on trading stock options which will give you a thorough understanding of trading stock options.
·    A weekly update of 8 actual portfolios so that you can follow their progress over time.
·    Specific trades for each portfolio emailed to you so you may mirror them in your own account if you wish.
·    Access to historical analytic reports and portfolio updates posted in the Insiders section of Terry’s Tips.
·    If you choose to continue after the 2 free months, do nothing, and you’ll be billed at a discounted rate of $19.95 per month.  

3)    A FREE special report  “How We Made 100% on Apple in 2010-11 While AAPL Rose Only 25%“.

With this one-time offer, you will receive everything for only $79.95, the price of the White Paper alone. But you must order by Tuesday, August 2, 2011. Click here and enter Special Code 802 in the box at the bottom of the page to get the special Apple report as a free bonus.

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Posted in AAPL, Last Minute Strategy, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios, Weekly Options | No Comments »

Using Options as an Alternative to Buying Stock

Monday, July 25th, 2011

Apple (AAPL) announced blow-out earnings last week, up double from a year earlier. Wouldn’t you be happy if you owned some of the stock? You would have picked up a nice gain of 7.8% last week. Some people would be happy with that kind of gain for a whole year in this current market.

If you were a Terry’s Tips subscriber, and followed our actual options portfolio using AAPL, you would have been even happier. Your investment would have gained 27.2% last week, more than three times as much as the stock went up. (I personally own 6 units of this portfolio, and gained enough last week to pay for a semester of college for one of my grandchildren.)

Today I will explain a little about this portfolio which uses stock options as a proxy for owning stock in AAPL (or any company of your choosing as long as options are traded on that company).

Using Options as an Alternative to Buying Stock 

At Terry’s Tips, we do not advise buying stock in companies. We don’t think we’re smart enough to pick the big winners. Instead, we make the assumption that we have no idea which way the market is headed, and trade options on the market in general (the S&P 500 tracking stock – SPY).

But we know that people love to pick stocks. So we have devised a demonstration option portfolio to show how you can make several times as much money with options than you could by just buying shares of the company’s stock. We selected AAPL as the underlying stock for this portfolio.

We call this strategy the Shoot Strategy (as in Shoot for the Stars). One neat thing about this strategy is that it makes money even if the stock stays absolutely flat. It doesn’t make a lot of money if the stock stays flat, but anything at all is better than the return you get from owning the stock (unless it pays a dividend, of course).

The Shoot Strategy consists of buying longer-term call options (sometimes called LEAPS) and also selling short-term calls against these long calls. The short calls are at higher strike prices than the long calls we own. Rather than maximizing the short-term time premium that we collect from selling the calls, we sell just enough to slightly more than cover the premium decay that will take place in the longer term calls we own (all options decline in value over time if the stock stays flat, but the short-term calls we have sold to someone else decline at a faster rate than the longer-term calls that we own).

Here is the risk profile graph for our current AAPL demonstration portfolio (we call it the William Tell) for an $8700 unit as of July 22nd when the stock closed at $391.49. The graph shows how much will be gained or loss at the August 19, 2011 expiration of the August calls that we have sold (at the various possible prices of AAPL on that date).

You can see that if the stock remains absolutely flat, the portfolio should gain $1517.80 (about 17%) in a single month (admittedly, that is unusually high for this portfolio, and we will probably make a trade next week which will cause a lower gain at a flat stock price and higher gains if the stock moves higher.

If the stock does move higher by $10 or $20 over the next month, the portfolio should gain over 20%.  The stock can fall as much as $10 before a loss will result (owners of the stock lose money even if it falls by a single dollar).   

We have written a detailed report on how the actual William Tell portfolio gained over 100% in 2010-11 while the stock rose only 25%.  You will learn how you can use the Shoot Strategy on any other stock of your choosing as well.  You can get this special report free when you subscribe to the Terry’s Tips service for a price which is less than a dinner for two at a decent restaurant – only $79.95 for the whole enchilada, including:

1)    My 72-page White Paper which explains my favorite option strategies in detail, including Trading Rules for each, and 20 companies to use with the “Lazy Way” Strategy, (which guarantees a 100% gain in 2 years if the stock stays flat or goes up).

2)    2 FREE months of the Options Tutorial Program (a $49.90 value), which includes:
·    A 14-lesson tutorial on trading stock options which will give you a thorough understanding of trading stock options.
·    A weekly update of 8 actual portfolios so that you can follow their progress over time.
·    Specific trades for each portfolio emailed to you so you may mirror them in your own account if you wish.
·    Access to historical analytic reports and portfolio updates posted in the Insiders section of Terry’s Tips.
·    If you choose to continue after the 2 free months, do nothing, and you’ll be billed at a discounted rate of $19.95 per month.  

3)    A FREE special report  “How We Made 100% on Apple in 2010-11 While AAPL Rose Only 25%“.

With this one-time offer, you will receive everything for only $79.95, the price of the White Paper alone. But you must order by Tuesday, August 2, 2011. Click here and enter Special Code 802 in the box at the bottom of the page to get the special Apple report as a free bonus.

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Posted in AAPL, SPY, Stock Option Trading Idea Of The Week, Stock Options Strategies, Terry's Tips Portfolios | No Comments »

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