Auto-Trade FAQ

Auto-Trade is a mechanism whereby an investor enters into an agreement with his broker authorizing the broker to make trades in the investor’s account based on recommendations of a financial newsletter such as Terry’s Tips.

It is important to understand that we are not a licensed investment advisor. We publish an investment newsletter that maintains several portfolios (with different strategies and underlying stocks or ETFs). We offer investment ideas but we are not managing your money or acting as an investment advisor. We do not make recommendations concerning which portfolios might be best for you. If you choose to mirror one of our portfolios, you are making an investment decision on your own, regardless of whether you have signed up for Auto-Trade with your broker or not.

Subscribers need a margin level account to participate in auto-trade though Terry’s Tips will never trade on margin. Most subscribers use regular investment accounts for auto-trade and all of our trades are okay to do in an IRA.

Subscribers to Terry’s Tips receive (if they request it) real-time Trade Alerts emailed to them as well as to a broker of their choice where they might have an Auto-Trade arrangement.

How much does Auto-Trade it cost?

If you Auto-Trade with Tastyworks, there is no charge for Auto-Trade other than their normal commission rates ($1.65 per contract for opening positions, no charge for closing positions). Tradier has an agreement with a Toronto-based broker called Global Autotrade whereby Tradier covers Global’s normal fee of $50 per month for one portfolio, $30 for a second portfolio, and $10 for additional portfolios if you trade 100 contracts each month. Tradier’s total commission fee is $10 which should save you hundreds or thousands of commission dollars each year. You may want to trade two or three Terry’s Tips portfolios in one account at Tradier if you want to guarantee hitting the 100 per month contracts level,

How do I sign up for Auto-Trade?

First you would sign up for at Terry’s Tips and select the portfolio(s) you’d like to follow. Then you would open and fund an account with Tradier or Tastyworks, select Terry’s Tips as your newsletter provider, and select the number of units of each portfolio you would like to trade. Full instructions are provided for our members.

What brokers offer Auto-Trade?

Contact us directly for more information about brokers and Auto-Trade. At the present time, we only have arrangements with tastyworks and Tradier. For many years, we dealt with thinkorswim at TDAmeritrade, but when Schwab bought the company, they eliminated the Auto-Trade service.

Does my Auto-Trade account have to be separate from other accounts?

Yes, at both tastyworks and Tradier, they require separate accounts for Auto-Trade. You may have as many portfolios as you wish in the Auto-Trade account, but you can’t place trades on your own in them (unless you want to opt out and close out all your positions.

Do you have access to my Auto-Trading account?

No, we do not know how many units you are trading or how many portfolios, and we don’t know your password or account number.

Can I get out of the Auto-Trade program at any time?

Yes, you may cancel at any time. You must cancel with Terry’s Tips as well as with the broker. You are responsible for removing any current positions from your account when you cancel.

Do you have access to my Auto-Trade Accounts?

No. We have no access to your personal accounts. We have no idea how much money you have invested or what other holdings you have.

What should I do if I decide to add (or remove) other portfolios through Auto-Trade?

Please email autotrade@terrystips.com with the name of the portfolio you will be adding (or removing).

Can I still join a portfolio even if I missed the start date?

Yes, a member may join any current portfolio. The only thing to note is that the unit amount is no longer the flat starting value. Once the portfolio starts trading, the unit value becomes a variable and is based on the actual account value. If you are not an Insider of Terry’s Tips, please inquire about the most recent unit values for our various portfolios at autotrade@terrystips.com.

Current Terry’s Tips Insiders can learn the approximate amount required to join any of the current strategy portfolios by reviewing the Summary of Strategy Portfolios chart in our Saturday Report.

Is there a limit to how much I can invest?

No. There is no limit to how much money you can invest. In fact, we know nothing about your account or how much investment capital you have devoted to mirroring our portfolios.

Is there a limit to how many people or how much total capital this program can handle?

At the present time, we are not worried that the collective trades of Terry’s Tips subscribers who have signed up for Auto-Trade with their brokers will affect the market. In fact, our experience has been that the larger the number of options your broker places as a single order, the better the price that can be negotiated.

When option positions are put on, the person on the other side of the trade is usually a market maker (Terry used to be one, so he has a solid understanding of how they work). The market maker earns his living by buying at the bid price and selling at the asked price – the more action for him, the better. He usually seeks a delta neutral position, so that he does not care which way the market moves.

There are dozens of other spread strategies a market maker employs – including buying or selling the stock, use of both puts and calls – back spreads, butterflys, trading against the box, ratio spreads, vertical spreads, diagonal spreads, straddles, and even strangles. Whenever a market maker is faced with a large demand for one particular option, he will use that demand as part of a larger strategy he is following. The bottom line is that large numbers of any single option can be traded without affecting its price (this does not hold true for less-actively traded options in individual companies, however).

October 31, 2023

Dear [[firstname]],

Happy Halloween!

I haven’t written in a couple of weeks since credits weren’t close enough to my target entry prices when I initially sent the trades to my subscribers. However, the credit for last week’s trade on Charles Schwab (SCHW) has come back and now exceeds my initial target.

So, I figured why not send it now since I still like the setup. I’m not changing the initial write-up that I sent to my Saturday Report subscribers on October 21, so it may sound a bit outdated. But the trade is still a good play.

Moreover, this week’s trade credit is a little above my entry level, so it’s good to go as well. So, you’re getting a first this week – two trades. Both bearish call credit spreads on stocks after they reported earnings.

Before I get to the trades, I want to let you know that our Terry’s Tips portfolios have caught fire in the past couple of weeks. We’re up 7% for the past two weeks while the S&P 500 fell nearly 5%. Our recent surge has pushed our overall return to more than triple that of the S&P this year.

I’m also happy to highlight our Microsoft (MSFT) portfolio, which gained 14% just last week alone and 40% over the past four weeks. It’s now up 65% for the year and is challenging our QQQ portfolio, which is up more than 70%!

How long can you afford to miss out on these profits? For our loyal newsletter subscribers (that’s you), I’m of course keeping the sale going that saves you more than 50% on a monthly subscription to Terry’s Tips.

You’ll get …

A month of all trade alerts in our four portfolios, giving detailed instructions for entering and exiting positions. Trade one portfolio or all four. It’s up to you.
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, keep all the valuable reports.

I look forward to having you join in the fun and profits! Now on to the trades, starting with the previous week’s trade …

Avast Ye Schwabs

Two call spreads in Estee Lauder (EL) and the SPDR Healthcare ETF (XLV) expired worthless yesterday for gains of 25% apiece. To be fair, our bullish spread on Lululemon Athletica (LULU) expired in the money a week earlier for a larger loss. But the LULU misstep interrupted a string of seven straight winners. A large part of this success has been due to taking a more bearish stance toward the market. In fact, today’s trade marks the fifth straight bearish call spread and eighth of the past 11. And with good reason, as our only losses of the past two months have been bullish positions. We’re on a solid roll. I hope you’re banking some winners.

With earnings season hitting full stride this week, there’s no end to the trade possibilities. Of course, there were the spotlight names, such as Tesla (TSLA) and Netflix (NFLX), whose large post-earnings moves grabbed headlines. But I prefer stocks that have smaller, off-the-radar moves that have a lower likelihood of reversing. One such stock is Charles Schwab (SCHW), which is no stranger to these pages (you may recall I had a few issues with the TD transition in September).

SCHW reported before the open on Monday, so we had a whole week’s worth of post-earnings price action to digest. The numbers were mixed, with net income coming in slightly ahead of expectations while revenue fell a bit short. However, both numbers fell far short of last year’s figures. I won’t bore you by parsing through all the individual data points (bank deposits, net interest revenue, TD migration, new brokerage accounts, etc.). Analysts seem to feel that SCHW still faces several short-term hurdles that have buffeted it all year, though the longer-term prospects are encouraging.

Speaking of analysts, their reaction was much like SCHW’s earnings … mixed. There were no ratings changes while target price changes went both ways. But analysts are clearly bullish on SCHW, giving it a solid buy rating on average. The average target price is near $70, which is around 35% above Friday’s close. This fits into the struggle now, prosper later narrative I mentioned above. But since we’re looking ahead only a few weeks, the bearish case makes more sense.

On the chart, the stock reacted positively to earnings, popping 6% in Monday’s trading before settling for a 4.7% gain. But that was the high close of the week, as the shares tumbled more than 5% after Monday. It’s notable that the 20-day moving average provided staunch resistance throughout the week, containing the initial Monday burst and then sending the stock lower through the week’s end. The 20-day has done a solid job keeping the current decline intact since it rolled over in May. I’ll also note that the stock enjoyed a massive 12.6% spike after its previous earnings report in July, only to give it all back during the subsequent month.

If you agree that the stock will continue its downtrend based on the resistance from its 20-day moving average, consider the following credit spread trade that relies on SCHW staying below $53 through expiration in 6 weeks:

Buy to Open the SCHW 1 Dec 56 call (SCHW231201C56)
Sell to Open the SCHW 1 Dec 53 call (SCHW231201C53) for a credit of $0.75 (selling a vertical)

This credit is $0.09 less than the mid-point price of the spread at Friday’s $50.87 close. Note that I’m giving a little extra room on the entry credit. Unless SCHW falls sharply at the open on Monday, 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 $73.70. This trade reduces your buying power by $300, making your net investment $226.30 per spread ($300 – $73.70). If SCHW closes below $53 on Dec. 1, the options will expire worthless and your return on the spread would be 33% ($73.70/$226.30).

Here’s this week’s trade …

Low Voltage

We had another spread expire worthless on Friday, but it made us sweat. Adobe (ADBE) was looking great, which was saying something as our only open bullish position. It hit an annual high on Oct. 12, putting the short put nearly 15% out of the money. Then the falling market tide grabbed the stock and pulled it down to within eight points of the short strike at Friday’s close. Another day and it might have moved into the money. But it didn’t and we bagged a gain of over 30% for our eighth winner of the past nine closeouts. That leaves us with five open positions, all bearish call spreads.

I’d love to add a put spread this week, but I can’t make a case for fighting the bearish tape. Maybe next week. For this week, I had way too many earnings plays to choose from, as this was the busiest week of the season. Frankly, I stopped looking after an hour, realizing that I could have spent all day analyzing dozens and dozens of top names.

I settled on General Electric (GE), which may seem like an odd choice given that it had a blowout report and had its best post-earnings day in years. The company easily beat earnings and revenue estimates and raised earnings and revenue growth guidance for 2023. The stock responded with a 6.5% pop on Tuesday, its largest gain after earnings since Jan. 2020. What’s not to like, right?

Well, analysts didn’t seem overly excited. In fact, only two weighed in with target price increases of $1 and $2. That’s it. The average target sits near $126, which is around 19% above Friday’s close. I’ll also point out the last time GE saw $126 was six years ago. There were no ratings changes, which were already heavily slanted toward the buy level. This does not seem like a hearty endorsement of a stock that just had as good an earnings report as you’ll see.

While the shares enjoyed a big gain on Tuesday, the rest of the week didn’t go well. In fact, the stock closed out the week below the pre-earnings close. The dual resistance of the 20-day and 50-day moving averages were in play, as the stock closed the week below both. These trendlines have rolled over into declines, a bad sign given that the stock doesn’t stray far from either. Another factor to note: GE had a big pop of more than 6% after the previous earnings release, but the stock drifted lower after that first day and has never closed a day higher since.

It seems that the earnings effect lasted all of one day and the stock has resumed its downtrend that’s been in place for six weeks. This trade is a bet that the trend will continue, especially in light of the broader market’s weakness. Note that the short call strike sits above Tuesday’s close and the mid-October peak.

If you agree that the stock will continue its downtrend based on the resistance from its 20-day (blue line) and 50-day (red line) moving averages, consider the following credit spread trade that relies on GE staying below $114 (green line) through expiration in 6 weeks:

Buy to Open the GE 8 Dec 116 call (GE231208C116)
Sell to Open the GE 8 Dec 114 call (GE231208C114) for a credit of $0.40 (selling a vertical)

This credit is $0.05 less than the mid-point price of the spread at Friday’s $106.35 close. Note that I’m giving a little extra room on the entry credit. Unless GE falls sharply at the open on Monday, 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 $38.70. This trade reduces your buying power by $200, making your net investment $161.30 per spread ($200 – $38.70). If GE closes below $114 on Dec. 8, the options will expire worthless and your return on the spread would be 24% ($38.70/$161.30).

Good luck with these trades,

Remember to click here, select Sign Up Now and use Coupon Code D21M to start a monthly subscription to Terry’s Tips for half off.

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

Happy trading,

Jon

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October 9, 2023

October 10, 2023

With earnings reports virtually dried up this week and wanting to stay on the bearish side, I had to go back a few weeks to find reports that failed to impress the Street. One name that popped up was a stock that we successfully played (28% profit) for a bullish winner back in March – Darden Restaurants (DRI), the sit-down restaurant chain conglomerate that includes Olive Garden, LongHorn Steakhouse, Capital Grille, and the recently acquired Ruth’s Chris Steak House.

DRI reported earnings a couple of weeks ago. The numbers were solid, as the company beat estimates on both the top and bottom lines. Same-restaurant sales also handily beat expectations. Moreover, sales and profits were higher than a year earlier. The only negatives were slowing growth in its fine-dining holdings and some concern over its aggressive expansion plans amid a potential recessionary environment.

Analysts seemed unmoved by the seemingly positive news. The report was met with a mix of target price upgrades and more numerous downgrades. This left the average target in the $160-170 range, well above Friday’s $137 close. With no ratings changes, analysts remain firmly in the buy/outperform camp.

Perhaps analysts should take closer note of DRI’s stock chart and post-earnings performance. After hitting an all-time high in late July, the stock is down 21% and logged its lowest close in nearly a year on Friday. I’ll point out that the S&P 500 is down just 5% over the same time frame. This slump has been perfectly guided by the 20-day moving average, a trendline the stock hasn’t closed above in more than two months. Also, for technical wonks, the 50-day moving average is crossing below the 200-day moving average, also known as the “death cross.”

This bearish trade is based on the stock’s continued slump even after the good earnings results. With analysts perhaps too optimistic, it’s reasonable to expect some target price reductions, if not some ratings downgrades that could further pressure the share price.

Finally, the 20-day resistance is hard to ignore, which is why we’re playing a call spread with the short call strike sitting just above this trendline. Note that this trade has a smaller return than most because I wanted the short strike to be above the 20-day. Thus, we have a larger cushion of safety and greater probability of profit.

If you agree that the stock will continue its downtrend based on the resistance from its 20-day moving average (blue line), consider the following credit spread trade that relies on DRI staying below $145 (red line) through expiration in 6 weeks:

Buy to Open the DRI 17 Nov 150 call (DRI231117C150)
Sell to Open the DRI 17 Nov 145 call (DRI231117C145) for a credit of $0.85 (selling a vertical)

This credit is $0.02 less than the mid-point price of the spread at Friday’s $136.94 close. Unless DRI falls sharply at the open on Monday, 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 $500, making your net investment $416.30 per spread ($500 – $83.70). If DRI closes below $145 on Nov. 17, the options will expire worthless and your return on the spread would be 20% ($83.70/$416.30).

Happy trading,

Jon L

**Our QQQ portfolio is up more than 70% in 2023! Our MSFT portfolio is up around 30%! Overall, we’re beating the S&P. Don’t be left behind … now you can save more than 50% on a monthly subscription to Terry’s Tips. Just Click Here, select Sign Up Now and use Coupon Code D21M to start a monthly subscription to Terry’s Tips for half off.**

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September 25, 2023

Cold and Soggy

There were a few interesting earnings announcements this week, even though we’re in the quiet period for earnings reports (things start to ramp up again in three weeks). In fact, I had three bearish plays to choose from. That’s a good thing since we currently have three bullish and three bearish trades open, and I feel like the bears need a little more weight after the past week’s Fed-infected price action.

The trade this week is on prepared-food giant General Mills (GIS), which owns several iconic cereal brands along with such names as Betty Crocker, Blue Buffalo, Pillsbury, Progresso, Green Giant and Yoplait. GIS reported earnings numbers on Wednesday before the open that were filled with a lot of “buts.” Sales increased 4% due to higher prices, but volume was lower. Net income beat the consensus expectation but fell 18% from a year ago. GIS executives are bullish on their pet food segment but sales for the quarter were flat. Moreover, some analysts feel that consumers are reaching their limit on rising food costs. And GIS’s CFO said that the company’s operating profit margin will not improve this year.

All in all, it was not a great report, which is perhaps why the stock was hit with a few price target cuts. At least there were no ratings downgrades. Analysts on the whole are neutral toward the stock, while the average target price is in the $70-75 range compared to Friday’s close near $65.

Perhaps analysts would be a bit more skeptical if they took a quick glance at GIS’s chart, which shows the stock plunging 30% in the past four months. This descent has been expertly guided by the 20-day moving average, a trendline the stock has closed above just four times since mid-May. This resistance was evident the two days after earnings this week, when the shares failed to pierce the 20-day with early rallies. Note that the short call strike of our spread sits above this trendline.

If you agree that the stock will continue its downtrend after an uninspiring earnings report and remain below its 20-day moving average (blue line), consider the following credit spread trade that relies on GIS staying below $67.50 (red line) through expiration in 8 weeks:

Buy to Open the GIS 17 Nov 70 call (GIS231117C70)
Sell to Open the GIS 17 Nov 67.5 call (GIS231117C67.5) for a credit of $0.45 (selling a vertical)

This credit is $0.05 less than the mid-point price of the spread at Friday’s $64.82 close. Unless GIS falls sharply at the open on Monday, 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 $43.70. This trade reduces your buying power by $200, making your net investment $156.30 per spread ($200 – $43.70). If GIS closes below $67.50 on Nov. 17, the options will expire worthless and your return on the spread would be 28% ($43.70/$156.30).

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Auto-Trade FAQ

What brokers offer Auto-Trade?

Do you have access to my Auto-Trading account?

Can I get out of the Auto-Trade program at any time?

Do you have access to my Auto-Trade Accounts?

What should I do if I decide to add (or remove) other portfolios through Auto-Trade?

Can I still join a portfolio even if I missed the start date?

TERRY’S TIPS STOCK OPTIONS TRADING BLOG

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Auto-Trade FAQ

What brokers offer Auto-Trade?

Do you have access to my Auto-Trading account?

Can I get out of the Auto-Trade program at any time?

Do you have access to my Auto-Trade Accounts?

What should I do if I decide to add (or remove) other portfolios through Auto-Trade?

Can I still join a portfolio even if I missed the start date?

TERRY’S TIPS STOCK OPTIONS TRADING BLOG

Making 36%

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