from the desk of Dr. Terry F Allen

Skip navigation

Member Login  |  Contact Us  |  Sign Up

802-877-8330

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).

TERRY’S TIPS STOCK OPTIONS TRADING BLOG

November 28, 2022

November 28, 2022

Medical-device maker Medtronic (MDT) reported earnings this week that hardly impressed the Street. Quarterly sales and earnings fell from a year earlier, with revenue falling short of analyst expectations while profits met projections. The company also cut its full-year guidance, citing the usual supply-chain disruptions and a slower recovery in medical procedures postponed due to the pandemic.

MDT’s report was met with a couple of downgrades along with a heavy dose of target price declines. Nevertheless, the average price target sits above $94, about 19% higher than Friday’s close. That leaves room for more price target cutbacks.

The stock price has been sliding from more than a year, falling 42% from a record high reached in Sep. 2021. Since April, MDT has displayed a pattern of lower highs and lows with the 50-day moving average keeping a lid on brief rallies. The 50-day currently sits at $83, which is also the strike of the short call in our credit spread. This trade is thus based on the current downtrend continuing, with the declining 50-day providing resistance and keeping our spread out of the money.

If you agree that MDT will continue to trade beneath the 50-day moving average (blue line), consider the following trade that relies on the stock staying below $83 (red line) through expiration in six weeks:

Buy to Open the MDT 6 Jan 85 call (MDT230106C85)
Sell to Open the MDT 6 Jan 83 call (MDT230106C83) for a credit of $0.40 (selling a vertical)

This credit is $0.03 less than the mid-point price of the spread at Friday’s $79.12 close. Unless MDT 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 $38.70. This trade reduces your buying power by $200, making your net investment $161.30 per spread ($200 – $38.70). If MDT closes below $83 on Jan. 6, both options will expire worthless and your return on the spread would be 24% ($38.70/$161.30). 

November 21, 2022

November 21, 2022

Down Goes Tyson

Tyson Foods (TSN) can’t seem to get out of its own way. The company reported earnings on Nov. 14 that missed estimates on profits but beat on revenue. Higher chicken prices squeezed gross margins, which were cut in half.

But TSN has other problems. The week before earnings, the company’s CFO was arrested for public intoxication and criminal trespass. This week, the company recalled 94,000 pounds of ground beef that reportedly contained a “reflective, mirror-like material,” whatever that means.

Analysts didn’t seem to like the earnings news, as the stock was hit with a few target price downgrades. Even so, the average price target is 24% above Friday’s close, which seems overly optimistic. Perhaps the options market is more in touch with TSN’s prospects, as out-of-the-money puts are priced higher than the corresponding calls.

The stock traded lower after earnings and throughout the week, falling nearly 3%. While hardly catastrophic, the more bearish development is the continued resistance provided by the 50-day moving average. The stock hasn’t closed a day above the 50-day since it crossed below it in early August. Moreover, recent rally attempts in the past couple of weeks were firmly rebuffed.

This trade is based on TSN continuing to trade sideways or lower beneath the weight of the 50-day moving average (blue line). Note that the short call strike (red line) of our credit spread lies just above this trendline, meaning that TSN will have to overcome this resistance to put our spread in danger

If you agree that TSN will continue to trade beneath the 50-day moving average, consider the following trade that relies on the stock staying below $67.50 through expiration in four weeks:

Buy to Open the TSN 16 Dec 70 call (TSN221216C70)
Sell to Open the TSN 16 Dec 67.5 call (TSN221216C67.5) for a credit of $0.50 (selling a vertical)

This credit is $0.02 less than the mid-point price of the spread at Friday’s $65.52 close. Unless TSN 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 $48.70. This trade reduces your buying power by $250, making your net investment $201.30 per spread ($250 – $48.70). If TSN closes below $67.50 on Dec. 16, both options will expire worthless and your return on the spread would be 24% ($48.70/$201.30). 

November 14, 2022

November 14, 2022

Oil and gas producer Diamondback Energy (FANG) – which may have the best ticker symbol in finance – reported earnings on Monday that beat analyst expectations on both the top and bottom lines. Higher oil prices led to huge jumps in net income (+82%) and revenue (28%) compared to a year earlier. For the record, the average price of oil jumped 32% from last year’s third quarter.

Analysts were bullish on the results, reacting with several price target increases. The average price target now stands 9.6% above Friday’s close, which seems reasonable for an energy stock.

FANG had traded mostly flat in 2022 … until late September. That’s when the stock went on a major rally that has covered 48% in just seven weeks. In fact, a late-week surge allowed the stock to post all-time intraday and closing highs on Friday. The stock has been riding above the support of its 20-day moving average since closing above this trendline in early October.

This trade is based on FANG continuing its rally or at least not pulling back below the 20-day (blue line), which will cross above the short strike of our put spread (red line) within the next couple of days. Note that FANG’s strike prices are unusual (155.35 and 152.7), though that should have no impact on the trade or profit potential.

If you agree that FANG will continue to respect the 20-day moving average, consider the following trade that relies on the stock staying above $155.35 through expiration in five weeks:

Buy to Open the FANG 16 Dec 152.7 put (FANG221216P152.7)
Sell to Open the FANG 16 Dec 155.35 put (FANG221216P155.35) for a credit of $0.75 (selling a vertical)

This credit is $0.05 less than the mid-point price of the spread at Friday’s $164.35 close. Unless FANG surges 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 $73.70. This trade reduces your buying power by $265, making your net investment $191.30 per spread ($265 – $73.70). If FANG closes above $155.35 on Dec. 16, both options will expire worthless and your return on the spread would be 38% ($73.70/$191.30). 

Upcoming Market Dates:

Thursday, November 24th. Market closed for Thanksgiving
Friday, November 25th. Market closes early at 1:00 p.m. ET

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

    Sign Up For The Free Options Strategy Report & Our Newsletter Now!

    Sign up for Dr. Terry F Allen’s free newsletter and get immediate access to his most current report on his stock option trading strategies.

    tradier

    Tradier offers an auto-trade service which many Terry's Tips subscribers use to follow our portfolios.

    Member Login  |   Programs and Pricing  |  Testimonials  |  About Us  |  Terms and Conditions  |  Accessibility Statement  |  Privacy Policy  |  Site Map

    Options are not suitable for all investors as the special risks inherent to options trading my expose investors to potentially rapid and substantial losses. Please read Characteristics and Risks of Standardized Options before investing in options

    © Copyright 2001-2022 Terry's Tips, Inc. dba Terry's Tips
    235 Primrose Lane, Ferrisburgh, VT 05456