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The Terry’s Tips Track Record

Five-Year Track Record

Year Gain/Loss
2017 +113%

2018 -40%
2019 +103%
2020 +122%

2021 -2%
Average Year: +59%

Early 2022 Track Record

The extreme market volatility that existed in late 2021 continued into 2022 and most of the big moves were on the downside, two things that negatively impact the success of our 10K Strategy. This caused us to make some modifications on the way we carried out our weekly trades.

First, we have held about half our investment in cash so that when IVs fall to historically lower levels, (as they inevitably will) we won’t be crushed by our long positions falling so much.  Second, we have resisted the temptation to adjust every time the market surges one way or the other.  It usually reverses itself shortly after big moves in either direction.  And finally, we have maintained about half the portfolios in a delta-negative position so if the market does fall, some of them will do well.

The bottom line is that the composite gain for all four portfolios was over 10% for the first 13-week quarter of 2022.  During this period, the market (S&P 500) was down 18% and the Nasdaq fell 22%.  Considering we have held half our investment in cash, we have gained about 20% on the amount at risk. In any event, we have outperformed the underlying averages by a wide margin, so the 10K Strategy (with our recent modifications) seems to be handling this unusual volatility quite well.

Track Record for 2021

We carried out our 10K Strategy with 4 portfolios in 2021, each trading options on a separate underlying stock or ETF. For the first nine months of the year, weekly volatility of our underlying stocks or ETFs was higher than the option prices could support, and we incurred lower-than-usual returns or in some cases, losses. However, with three months to go, our composite portfolio average was above 20% for the year. Then volatility soared, and extended into 2022. Our final results were a disappointing loss of 2.4% for the year, as reported in our January 1, 2022 Saturday Report sent to subscribers:

PortfolioStock Start Current  Change     % 
   Value Value  
Boomers RevengeIWM       10,000      9,454   -546– 5.5%
Honey BadgerQQQ       10,000     11,350   +1,350 +13.5%
Rising TideCOST       10,000     7,566    -2,434 -24.3%
Wiley WolfMSFT       10,000     10,664     +664 +6.6%
  Totals        40,000     39,034     -966 -2.4%

Track Record for 2020 

We carried out our 10K Strategy with 5 portfolios in 2020, each trading options on a separate underlying stock or ETF.  During the year, we dropped one of the portfolios when the underling became too volatile for the options prices to handle, and we suffered a 50% loss on that portfolio.  

The other four 10K Strategy portfolios prospered, however, and chalked up an average gain of 122% for all 5 portfolios.  This record meant that in 3 of the past 4 years, our 10K Strategy portfolios have enjoyed average annual gains of over 100%.

At the end of 2020, three portfolios – Wiley Wolf (MSFT), Rising Tide (COST), and Earnings Eagle (TGT) – all more than tripled in value, led by the Wolf’s quadruple (this portfolio started out 2020 with $10,000 and ended up the year with $40,934 (after paying all commissions).

Track Record for 2019  

Our results for 2019 were extraordinary.  It was a good year for the market in general.  The S&P 500 (SPY) gained about 29%.  Just about any equity investment probably made money.  However, the average gain for our 10K Strategy portfolios exceeded 103%, or well more than 3 times as great as the market as a whole.   

Track Record for 2018

The success of the 10K Strategy is dependent on selecting underlying stocks or ETFs that stay flat or move higher.  The year 2018 was the only year in the past 10 years when the market fell during the calendar year.  This was especially true in the last quarter when prices fell across the board.  Our 10K Strategy portfolios all lost money in 2018, a dramatic difference from 2017 when the composite average portfolio gained over 113%.  Our worst 2018 performer was based on Facebook (FB). FB fell from a high of over $218 to end at $135, a drop of 38%.  Our portfolio lost over 90%, a huge reversal from the 700%+ gain that it had enjoyed in 2017 (see below).  

We carried out ten portfolios in 2018, many of which were experiments with strategies totally different from the basic 10K Strategy that has become the only strategy that we currently use. It was a down year for the market, and our composite loss for the year was 39.9% after culling out the portfolios which bore no resemblance to our basic strategy or which did not operate for the entire year.

The Terry’s Tips 2017 Track Record Results 

The year has ended, and it is time to record the results for 2017. The composite average of our 10 portfolios gained 113% for 2017, just about the best year we have enjoyed in our 16 years of publishing Terry’s Tips. Only one portfolio (Honey Badger) lost money (and it covered the entire loss for the year in the first week of 2018).

Each of our portfolios is carried in a separate brokerage account and include all commissions. We currently carry out four portfolios at Terry’s Tips is available for Auto-Trade at Tradier or TastyWorks (so you can follow a portfolio and never have to make a trade on your own).    All of these portfolios can be carried out inside an IRA.   Paying subscribers can follow the results of all the portfolios. Some newsletters only reveal their winning portfolios to all subscribers, but at Terry’s Tips, we disclose every trade and every position for every portfolio at all times.  

All results include commissions at the standard rate charged by Tradier for Terry’s Tips subscribers.  Many newsletters conveniently (for them) do not include commissions when they report their trading results.  By the way, our subscription rates are considerably less than just about any other options newsletter.

Earlier Years Results

Terry’s Tips has carried out actual portfolios for subscribers to follow (or auto-trade if they wished) since 2003. In most of these years, the option portfolios have beaten the market averages by a very large margin. In some years, the portfolios have incurred losses similar to the magnitude of the market losses.

Option trading involves leverage, and leverage works in both directions. Gains (and losses) are often greater than changes in the market. However, we have tried to minimize the losses in down years so that our losses are less than those of the markets in general, and to enjoy greater gains than the markets in good years. Most of the time, we have been successful in carrying out these goals. Of course, we must remind everyone that past performance is no guarantee that future results will be as great as they have been in the past, in spite of our expectations that they will do just that.

TERRY’S TIPS STOCK OPTIONS TRADING BLOG

September 26, 2022

Housing Poor

Homebuilding stocks got a boost early in the week after a prominent housing analyst upgraded the entire sector, including a rare “double upgrade” for Lennar (LEN) from underweight to overweight. The rationale was that housing tends to outperform coming out of a bear market and that “early pain = early gain.”

Now, he could very well be right … at some point. Housing stocks, along with the broader market, will eventually pull out of this bear market. But that’s off in the future. We’re still in the “early pain” phase.

LEN got a boost from the news but then trended lower after a mixed earnings report and another 75 bps rate hike from the Fed (with more to come). The stock could not pierce its declining 20-day moving average (blue line), which has kept a lid on LEN’s rally attempts after turning lower two months ago. Furthermore, the 50-day moving average (red line), which is now headed lower, sits overhead, ready to provide resistance.

This trade is based on more “early pain” for the homebuilders based on rising interest rates, mortgage rates at 14-year highs and the looming prospect of a recession. We are playing a call credit spread with the short call sitting above the 50-day, meaning that LEN will have to overcome two points of resistance to move the spread into the money.

If you agree that LEN will continue to slide lower, consider the following trade that relies on the stock staying below $82 (green line) through expiration in six weeks:

Buy to Open the LEN 4Nov 85 call (LEN221104C85)
Sell to Open the LEN 4Nov 82 call (LEN221104C82) for a credit of $1.05 (selling a vertical)

This credit is $0.02 less than the mid-point price of the spread at Friday’s $77.07 close. Unless LEN sags 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 $103.70. This trade reduces your buying power by $300, making your net investment $196.30 per spread ($300 – $103.70). If LEN closes below $82 on Nov. 4, both options will expire worthless and your return on the spread would be 53% ($103.70/$196.30). 

September 20, 2022

Pumped Up

Much is made of gas prices declining for so many weeks in a row (I think we’re at 13 and counting). And that’s great for drivers. But what about the oil companies. Don’t they suffer when pump prices decline? Apparently not.

Gas prices peaked in mid-June and have dropped about 25% since then. But Chevron (CVX) has gained more than 5% during that period. For the year, CVX is up 33%. Its only major blip this year was the June swoon that pulled all stocks lower. But the decline was supported by the 200-day moving average, which allowed just a handful of daily closes below it in mid-July.

This trade is based on the strength of oil companies continuing for the next couple of months. More specifically, it is relying on the continued support of the 200-day. Note that the short put of our spread is right on the 200-day (blue line) and will be below it given the trendline’s current slope. Thus, CVX will have to penetrate that support to move the spread into the money.

If you agree that CVX will respect the 200-day, consider the following trade that relies on the stock staying above $148 (red line) through expiration in six weeks:

Buy to Open the CVX 28Oct 145 put (CVX221028P145)
Sell to Open the CVX 28Oct 148 put (CVX221028P148) 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 $156.45 close. Unless CVX pops 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 $300, making your net investment $226.30 per spread ($300 – $73.70). If CVX closes above $148 on October 28, both options will expire worthless and your return on the spread would be 33% ($73.70/$226.30). 

September 12, 2022

September 12, 2022

Warp Speed for This Lithium Producer

Sociedad Quimica y Minera de Chile (SQM) producers highly sought after commodities, most notably lithium and potassium fertilizers. Though it missed on earnings in its August earnings report, it easily beat on sales. A couple of analysts raised their price target after the news, though the overall mood toward the stock is between a buy and a hold.

But what do analysts know? SQM is up 120% this year (not a typo) … and it pays a dividend of more than 11%. The stock has recovered what it lost following earnings and came within four cents of hitting an all-time high in Friday’s trading. Though it has traded mostly sideways for the past three months, the overall uptrend remains intact, as the stock continues to put in higher lows. Plus, its 20-day and 50-day moving averages are pointed higher.

This trade is a play on SQM’s continued strength as it sits in one of the most favorable sectors within the global economy – supplying EV battery makers. We are thus going with a put credit spread with the short put sitting below the 20-day moving average (blue line). 

If you agree that SQM will continue its uptrend, consider the following trade that relies on the stock staying above $100 (red line) through expiration in six weeks:

Buy to Open the SQM 21Oct 95 put (SQM221021P95)
Sell to Open the SQM 21Oct 100 put (SQM221021P100) for a credit of $1.10 (selling a vertical)

This credit is $0.02 less than the mid-point price of the spread at Friday’s $111.12 close. Unless SQM pops 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 $108.70. This trade reduces your buying power by $500, making your net investment $391.30 per spread ($500 – $108.70). If SQM closes above $100 on October 21, both options will expire worthless and your return on the spread would be 28% ($108.70/$391.30). 

Upcoming Market Dates:

Monday September 5th. Market closed for Labor Day
Monday October 10th. Market closed for Columbus Day

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.

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