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    TERRY’S TIPS STOCK OPTIONS TRADING BLOG

    February 1, 2023

    February 1, 2023

    Dear [[firstname]],

    Here is your Option Trade of the Week, as given to our Terry’s Tips Insider Members as part of the Saturday Report. With earnings season in full swing, we had lots to choose from this week. We’re back in the chip sector with a bullish play.

    Before getting to the trade, there’s still time to jump on our huge discount offer to join Terry’s Tips as an Insider Member that lets you trade up to four portfolios. These portfolios use our proprietary 10K Strategy, which has generated average annual gains of 60% for the past five years in actual brokerage accounts (including all commissions).  In 2022, our portfolios beat their underlying stock performance by an average of 22%

    We’re still running a special new-year sale that saves you more than 50% on a monthly subscription to Terry’s Tips. For just $98, you’ll get:

    • A month of all trade alerts in our four portfolios, giving detailed instructions for entering and exiting positions.
    • Four to five (depending on the month) weekly issues of our Saturday Report, which shows all the trades and positions for our four portfolios, a discussion of the week’s trading activity and early access to our Option Trade of the Week.
    • Instructions on how to execute the 10K Strategy on your own.
    • A 14-day options tutorial on the opportunities and risks of trading options.
    • Our updated 10K Strategy white paper, a thorough discussion of the strategy basics and tactics.
    • Full-member access to all our premium special reports that can make you a wiser and more profitable options trader. 

    To become a Terry’s Tips Insider Member, just Click Here, select Sign Up Now and use Coupon Code D21M to start a monthly subscription to Terry’s Tips  for half off. You can cancel after a month but, of course, still keep all the valuable reports.

    We look forward to having you join us in 2023! Now on to the trade …

    Feeling Chipper

    KLA Corp. (KLAC) provides process-control technology to the semiconductor industry. The company reported earnings after the bell on Thursday that beat estimates on both the top and bottom lines. But the fly in the ointment came in the form of a lowered outlook for the third quarter that fell below expectations. The stock fell nearly 7% on Friday, its largest one-day, post-earnings decline in eight years.

    So, why the optimism? First, analysts didn’t seem all that concerned. While there was one downgrade on the news, the stock was hit with several target price increases. The current average price target for KLAC is only about 8% above Friday’s close. That’s far from unreasonable given how analysts usually are more ebullient toward tech names. And the average analyst rating is a moderate buy, which leaves room for future upgrades.

    Second, KLAC’s chart shows that Friday’s plunge, while perhaps unsettling, did not signal the end of the stock’s current strong rally. Even with the Friday drop, the stock has gained 60% in just three months. The rally has been guided by the combined support of the 20-day and 50-day moving averages. The 50-day is the key to this trade, however, as it has not allowed a daily close below it since early November. It also served as key support during a pullback in late December. Note that the short strike of our put spread is below the 50-day, so the stock will have to pierce this support to move the spread into the money.

    Third, while the early returns on chip stocks (including Intel this week) suggest some rougher waters next quarter, the sector as a whole is rallying. The VanEck Semiconductor ETF (SMH) has been on a strong, month-long rally and hit a five-month high during Friday’s session.

    If you agree that KLAC will continue to find support at its 50-day moving average (blue line), consider the following trade that relies on the stock staying above $390 (red line) through expiration in 6 weeks:

    Buy to Open the KLAC 10 Mar 385 put (KLAC230310P385)
    Sell to Open the KLAC 10 Mar 390 put (KLAC230310P390) for a credit of $1.30 (selling a vertical)

    This credit is $0.05 less than the mid-point price of the spread at Friday’s $399.37 close. Unless KLAC rises quickly, you should be able to get close to that price.

    The commission on this trade should be no more than $1.30 per spread. Each spread would then yield $128.70. This trade reduces your buying power by $500, making your net investment $371.30 per spread ($500 – $128.70). If KLAC closes above $390 on Mar. 10, both options will expire worthless and your return on the spread would be 35% ($128.70/$371.30).   

    Testimonial of the Week

    I have been a subscriber for about a year. I autotrade in 2 different accounts, all your strategies. I read everything you write on Saturdays. I love your happiness thoughts and everything else. I usually do not communicate at all but I had to tell you how well my accounts with you are doing compared to everything else. You are awesome. Keep up the good work. Thank you.

    ~ Maya

    Thank you again for being a part of the Terry’s Tips newsletter. Any questions?  Email Terry@terrystips.com

    Happy trading,

    Jon

    January 24, 2023

    January 24, 2023

    Dear [[firstname]],

    Here is your Option Trade of the Week, as given to our Terry’s Tips Insider Members as part of the Saturday Report. With earnings season underway, we’re back to our typical earnings plays with a return to the bearish side.

    Before getting to the trade, there’s still time to jump on our huge discount offer to join Terry’s Tips as an Insider Member that lets you trade up to four portfolios. These portfolios use our proprietary 10K Strategy, which has generated average annual gains of 60% for the past five years in actual brokerage accounts (including all commissions).  In 2022, our portfolios beat their underlying stock performance by an average of 22%

    We’re still running a special new-year sale that saves you more than 50% on a monthly subscription to Terry’s Tips. For just $98, you’ll get:

    • A month of all trade alerts in our four portfolios, giving detailed instructions for entering and exiting positions.
    • Four to five (depending on the month) weekly issues of our Saturday Report, which shows all the trades and positions for our four portfolios, a discussion of the week’s trading activity and early access to our Option Trade of the Week.
    • Instructions on how to execute the 10K Strategy on your own.
    • A 14-day options tutorial on the opportunities and risks of trading options.
    • Our updated 10K Strategy white paper, a thorough discussion of the strategy basics and tactics.
    • Full-member access to all our premium special reports that can make you a wiser and more profitable options trader. 

    To become a Terry’s Tips Insider Member, just Click Here, select Sign Up Now and use Coupon Code D21M to start a monthly subscription to Terry’s Tips  for half off. You can cancel after a month but, of course, still keep all the valuable reports.

    We look forward to having you join us in 2023! Now on to the trade …

    Tarnished Goldman

    With earnings season now underway, we can focus on companies that have recently reported. Though the docket was sparse this past week, there were a few juicy names to choose from. One was Goldman Sachs (GS), which reported a miserable quarter before the week’s trading began on Tuesday.

    Earnings plunged 66% from a year earlier on slower corporate dealmaking and 48% lower investment banking fees. Earnings per share came in at $3.32, far below the expected $5.56. FactSet noted it was the bank’s largest miss in years. Revenue also dropped and missed estimates.

    The stock reacted by falling 6.4% on Tuesday, its second-largest one-day, post-earnings decline since April 2009. The week didn’t get any better for GS, as reports came in on Friday that the Federal Reserve is investigating whether the bank had the appropriate safeguards in its consumer business. The stock fell 2.5% on a day when stocks were higher.

    The stock’s 8.6% plummet last week pulled it below its 20-day and 50-day moving averages. The 50-day is rolling over into a decline for the first time in three months, while the 20-day appears poised to head lower as well. We are going with a bearish call spread, with the short call strike sitting between the 20-day (blue line) and 50-day (red line) trendlines. However, given the 50-day’s current path, it should fall below this strike and serve as a second potential point of resistance to keep the spread out of the money.

    If you agree that GS will continue to struggle, consider the following trade that relies on the stock staying below $360 (green line) through expiration in 6 weeks:

    Buy to Open the GS 3 Mar 365 call (GS230303C365)

    Sell to Open the GS 3 Mar 360 call (GS230303C360) for a credit of $1.25 (selling a vertical)

    This credit is $0.05 less than the mid-point price of the spread at Friday’s $341.84 close. Unless GS falls quickly, you should be able to get close to that price. The commission on this trade should be no more than $1.30 per spread. Each spread would then yield $123.70. This trade reduces your buying power by $500, making your net investment $376.30 per spread ($500 – $123.70). If GS closes below $360 on Mar. 3, both options will expire worthless and your return on the spread would be 33% ($123.70/$376.30).

    Any questions?  Email Terry@terrystips.com

    Testimonial of the Week

    I have been a subscriber for about a year. I autotrade in 2 different accounts, all your strategies. I read everything you write on Saturdays. I love your happiness thoughts and everything else. I usually do not communicate at all but I had to tell you how well my accounts with you are doing compared to everything else. You are awesome. Keep up the good work. Thank you.

    ~ Maya

    Any questions?  Email Terry@terrystips.com.

    Thank you again for being a part of the Terry’s Tips newsletter.

    Happy trading,

    Terry

    January 9, 2023

    January 9, 2023

    Dear [[firstname]],

    Here is your Option Trade of the Week, generated by our trading team, for your consideration. We’re going with another ETF this week, but this time back on the bearish side.

    Before getting to the trade, there’s still time to jump on our huge discount offer to join Terry’s Tips as an Insider Member that lets you trade up to four portfolios. These portfolios use our proprietary 10K Strategy, which has generated average annual gains of 60% for the past five years in actual brokerage accounts (including all commissions).  In 2022, our portfolios beat their underlying stock performance by an average of 22%

    We’re still running a special new-year sale that saves you more than 50% on a monthly subscription to Terry’s Tips. For just $98, you’ll get:

    • A month of all trade alerts in our four portfolios, giving detailed instructions for entering and exiting positions.
    • Four to five (depending on the month) weekly issues of our Saturday Report, which shows all the trades and positions for our four portfolios, a discussion of the week’s trading activity and early access to our Option Trade of the Week.
    • Instructions on how to execute the 10K Strategy on your own.
    • A 14-day options tutorial on the opportunities and risks of trading options.
    • Our updated 10K Strategy white paper, a thorough discussion of the strategy basics and tactics.
    • Full-member access to all our premium special reports that can make you a wiser and more profitable options trader. 

    To become a Terry’s Tips Insider Member, just Click Here, select Sign Up Now and use Coupon Code D21M to start a monthly subscription to Terry’s Tips  for half off. You can cancel after a month but, of course, still keep all the valuable reports.

    We look forward to having you join us in 2023! Now on to the trade …

    Attention Shoppers

    With earnings reports non-existent, we’re sticking with ETFs again this week, this time on the bearish side with the retail sector. The SPDR S&P Retail ETF (XRT) is a broad-based, equal-weighted index of around 100 retail stocks. No stock is worth more than 1.5% of the portfolio and the top 10 holdings are littered with small niche names, some of which I’ve frankly never heard of (Sally Beauty, Franchise Group, Leslie’s). Amazon and Costco, on the other hand, make up a mere 2.2% combined.

    XRT had a rough 2022, losing about a third of its value. That puts it on par with tech stocks, which it is not, and trailing the broader market. Should we expect a rebound in 2023? I won’t hazard a guess. But we know the Fed will continue to raise rates to tame inflation. Many expect some sort of recession. The outlook appears muddy at best and bearish at worst.

    XRT has staged a mini-rally to start 2023, gaining 3.8% in the first week. But the ETF is now bumping into its 50-day moving average. However, the 50-day hasn’t provided much resistance or support for the past several months. Of greater concern is the overhead 200-day moving average, which has been declining for more than a year. This trendline marked a top in August and kept XRT in check in November, allowing just two daily closes above it.

    This bearish trade is a play on XRT once again faltering at the 200-day, which sits 3.7% above the Friday closing price. Note that the short call strike of our spread (red line) sits above the 200-day (blue line), meaning this resistance will need to be broken to move the spread into the money. Options traders have a similar outlook, pricing puts higher than equidistant out-of-the-money calls.

    If you agree that XRT will fail to overtake the 200-day, consider the following trade that relies on the ETF staying below $66 through expiration in 6 weeks:

    Buy to Open the XRT 17 Feb 69 call (XRT230217C69)

    Sell to Open the XRT 17 Feb 66 call (XRT230217C66) for a credit of $0.85 (selling a vertical)

    This credit is $0.05 less than the mid-point price of the spread at Monday’s $62.46 close. Unless XRT drops quickly, you should be able to get close to that price.

    The commission on this trade should be no more than $1.30 per spread. Each spread would then yield $83.70. This trade reduces your buying power by $300, making your net investment $216.30 per spread ($300 – $83.70). If XRT closes below $66 on Feb. 17, both options will expire worthless and your return on the spread would be 39% ($83.70/$216.30).   

    Testimonial of the Week

    I have been a subscriber for about a year. I autotrade in 2 different accounts, all your strategies. I read everything you write on Saturdays. I love your happiness thoughts and everything else. I usually do not communicate at all but I had to tell you how well my accounts with you are doing compared to everything else. You are awesome. Keep up the good work. Thank you. ~ Maya

    Thank you again for being a part of the Terry’s Tips newsletter. Any questions?  Email Terry@terrystips.com

    Happy trading,

    Terry

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