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    TERRY’S TIPS STOCK OPTIONS TRADING BLOG

    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

    January 6, 2023

    January 6, 2023

    Two and a half years ago, I found myself in the ICU of the University of Vermont Hospital.  I had all the symptoms of Covid even though I had tested negative several times.  My doctor kept saying that the tests had to be false negatives.  Surely, it was Covid, he said.

    I checked myself in to the ER of Porter Hospital in Middlebury at midnight on a Friday.  My blood pressure was 65 over 45, and after filling me full of fluids and keeping me awake all night, they couldn’t get that upper reading over 70.

    In the morning, they rushed me north to the ICU where they anticipated doing a surgical procedure on my aorta.  They let me make a phone call to Jon Lewis who had been sharing the responsibilities of making the trades in our portfolios.  I told him that he would have to write the Saturday Report that day as well as taking over all the portfolios on Monday.  He said he didn’t think he could do it.  I told him that I surely couldn’t do it, and he was the only one out there who could do it all.

    When the test results at the ICU came back, we learned that I did not have Covid after all, and the anti-biotic that they had given me at Porter had saved my life.  Seems that I had a tick-induced disease called Anaplasmosis, and a week later, I felt totally fine.

    Ever since that Saturday in July, Jon Lewis has made every trade in every portfolio and written every Saturday Report.  I spoke with him and shared ideas on a regular basis, but he made all the final decisions.  Jon has done a better job than I have in carrying out the 10K Strategy.  For 2022, I traded this strategy in my personal portfolio and did far worse than the market averages. It was my worst year ever. 

    Meanwhile, Jon beat those averages by more than 20%. He wisely handled the extreme volatility by keeping about half the portfolios in cash, and placing spreads at a larger range of strikes than we had ever used in the past.

    I endured more health issues again this year.  I have had asthma-like breathing issues that prevented me from playing tennis singles or taking long-distance hikes.  In June, a biopsy showed a “high risk” cancer tumor in my prostate.  A long course of radiation has hopefully taken care of it.  And an adjustment to my pacemaker has improved my breathing considerably.

    I am almost 84 years old and have been involved in Terry’s Tips for 21 years since I started in in 2001.  I continue to love options trading and place trades in my personal account nearly every trading day.  But this seems to be the appropriate time to turn the entire business over to Jon.

    I want to thank my loyal subscribers who hung in there through the difficult years (like 2022).  I have enjoyed conversations over the years with many of you. I hope some of those relationships will continue as we move forward.

    I will continue to read the Saturday Report each week, and surely have thoughts I would like to share with Jon. I may offer some additions to the quotations list at the end, but going forward, this is his baby. I am absolutely certain that if volatility falls just a bit to where it has hung out in the great majority of years, he will kill the market averages by a huge margin.

    I wish Jon, and all the subscribers who make Terry’s Tips possible, all the luck in the world.  You have made this a wonderful ride for me, and I thank you from the bottom of my heart.

    Happy trading,

    Terry

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