“An S&P 500 index fund never beats the index. There’s fees, there’s friction costs, and other costs involved,” said Robert Reynolds, a manager at Putnam Investment Fund.
Global Market Comments
September 19, 2024
Fiat Lux
Featured Trade:
(THE BEST LEAPS TESTIMONIAL EVER)
Thank you for your sage advice and ability to leave the corporate grind. I work from home and trade from anywhere in the world. I'm on my way to becoming a full-fledged Mad Hedge Fund Trader!
Now that I've been a Mad Hedge subscriber for five years, I've experienced trading with you in a world of extreme market volatility and global turmoil, many market rotations, and have mastered options strategies I had never deployed. I've made more than my healthy annual salary in one month.
I've also strengthened my understanding of economics, geopolitics, and the global marketplace, all while enjoying your amazing life stories and travels. I still make costly, stupid mistakes now and then, but I'm not a professional trader. Thanks for telling me I'm now a semi-professional!
Today, I'd like to share my first round of amazing LEAPS performances. Thanks again for your advice to take profits, reinvest, and when to go to cash for the next round of opportunities.
I entered my first LEAPS in October 2022, when you called the market bottom (amazing), and added more in December 2022 on a dip, and all your LEAP alerts since then.
NVDA Jan 17, 2025 call spread: Took profits of 482% at 46% max profit on May 23, 2023, to cover LEAPs cost, leaving only pure profit in the trade.
My LEAP cost on the $10 spread was $0.88. Are you kidding me? Sold @ $5.10.
NVDA Jan 17, 2025 call spread: Took remaining profits of 811% at 78% max profit on Jan 19, 2024, even though waiting to expiration would yield an outstanding 1,040% return! The risk/reward was no longer in our favor. Sold at $7.99 one year before expiration.
BRKB Jan 17, 2025 call spread: Took profits of 421%
JPM Jan 17, 2025 call spread: Took profits of 412%
PANW Jan 17, 2025 call spread: Took profits of 394%
VRTX Jan 17, 2025 call spread: Took profits of 350%
SLV Jan 17, 2025 call spread: Took profits of 113%
JPM Jan 19 2024 call spread: Took profits of 87%
PANW Jan 17, 2025 call spread: Took profits of 85%
X Dec 19 2025 call spread: Took profits of 70%
All of these LEAPs had much more room to run, but we're not here to post "glamor" returns; we're here to make money, and, more importantly, your pal Warren Buffet's rule #1: never lose money! Don't ignore your stops! Lock-in hefty profits early and reinvest when the underlying prices spike.
Don't be greedy. Mr. Market is always right. Sell when the market is over-exuberant and complacent. Buy when there's blood in the street, and you want to puke it's so frightening.
These are just some of my LEAPS profits, and I'm currently holding many more. I have so many more amazing trades to report and stories to tell. Coming soon.
Happy Trading!
Bill from Mill Valley, CA
'If you can get a dividend higher than the yield on ten-year debt, it's an opportunity we haven't seen in our lifetime. On a five-year horizon, investing in large multinationals with high dividends will have a large payday' said Lawrence Fink, CEO of Black Rock.
Global Market Comments
September 18, 2024
Fiat Lux
Featured Trade:
(TESTIMONIAL)
(HOW TO SPOT A MARKET TOP),
(SPY), (NFLX), (TSLA), (FB), (LEN), (TLT), (BAC)
I just wanted to send my thanks for creating such a wonderful newsletter. It is very hard in today's world to sift the wheat from the chaff.
The reason I am reaching out today is that a few days ago John came out with a piece regarding other newsletters. I have been following you for the past few years and from what I have seen and have traded, this is by far the most valuable service that I have luckily stumbled across.
Jon
Columbus, OH
It’s fall again when my most loyal readers are to be found taking transcontinental railroad journeys, crossing the Atlantic in a first-class suite on the Queen Mary 2, or getting the early jump on the Caribbean beaches.
What better time to spend your trading profits than after all the kids have gone back to school and the summer vacation destination crush has subsided?
It’s an empty nester’s paradise.
Trading in the stock market is reflecting as much, with increasingly narrowing its range since the August 5 flash crash, and trading volumes are subsiding.
Is it really September already?
It’s as if through some weird, Rod Serling-type time flip, August became September, and September morphed into August. That’s why we got a rip-roaring August followed by a sleepy, boring September.
Welcome to the misplaced summer market.
I say all this because the longer the market moves sideways, the more investors get nervous and start bailing on their best-performing stocks.
The perma bears are always out there in force (it sells more newsletters), and with the memories of the 2008 and 2020 crashes still fresh and painful, the fears of a sudden market meltdown are constant and ever-present.
In the minds of many newly gun-shy traders, the next 1,000-point flash crash is only an opening away.
In fact, nothing could be further from the truth.
What we are seeing unfold here is not the PRICE correction that people are used to but a TIME correction, where the averages move sideways for a while, in this case, a few months.
Eventually, the moving averages catch up, and it is off to the races once again.
The reality is that there is a far greater risk of an impending market melt-up than a meltdown. But to understand why, we must delve further into history and then the fundamentals.
For a start, many investors have not believed in this bull market for a nanosecond from the very beginning. They have been pouring their new cash into the generous 5% yielding bond market instead.
Some 95% of active managers are underperforming their benchmark indexes this year, the lowest level since 1997, compared to only 76% in a normal year.
Therefore, this stock market has “CHASE” written all over it.
Too many managers have only three months left to make their years, lest they spend 2025 driving a taxi for Uber and handing out free bottles of water. The rest of 2025 will be one giant “beta” (outperformance) chase.
You can’t blame these guys for being scared. My late mentor, Morgan Stanley’s money management guru Barton Biggs, taught me that bull markets climb a never-ending wall of worry. And what a wall it has been.
Worry has certainly been in abundance this year, with China collapsing, Gaza exploding, Ukraine and now Russia invaded, the contentious presidential elections looming, oil in free fall, and the worst fire season in decades.
When in doubt, Jay Powell is all about easy money until proven otherwise. Until then, think lower rates for longer, especially on the heels of a disappointing weak August Nonfarm Payroll Report.
So, I think we have a nice setup here going into Q4. It could be a Q4 2023 lite-- a gain of 5%-10% in a cloud of dust.
The sector leaders will be the usual suspects: big technology names, health care, and biotech (IBB). Banks like (BAC), (JPM), (KBE) will get a steroid shot from rising interest rates, no matter how gradual.
To add some spice to your portfolio (perhaps at the cost of some sleepless nights), you can dally in some big momentum names, like Tesla (TSLA), Netflix (NFLX), DH Horton (DHI), Lennar Housing (LEN), and Facebook (FB).
"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem," said the late President,
Ronald Reagan.
Global Market Comments
September 17, 2024
Fiat Lux
Featured Trade:
(CAMECO LEAPS),
(CCJ)
BUY the Cameco (CCJ) January 2026 $40-$42 out-of-the-money vertical Bull Call spread LEAPS at $0.75 or best
Opening Trade
9-17-2024
expiration date: January 16, 2026
Number of Contracts = 1 contract
We have just seen a healthy 37% correction in the shares of Canadian uranium miner Cameco (CCJ), and I am starting to salivate. Finally, I can put my time at the Atomic Energy Commission in the 1970s to work.
If you don’t do options, buy the stock. My target for (CCJ) in 2026 is $80, up 120%.
How would you like to buy a stock that is a call option on:
* A recovery of the US economy
*A recovery of the Chinese economy
*The expansion of the electrical grid
*The conversion to clean energy
*The next generation of new energy technology.
Then that would be Cameco.
Cameco Corporation (formerly Canadian Mining and Energy Corporation) is the world's largest publicly traded uranium company, based in Saskatoon, Saskatchewan, Canada. It is the world's second-largest uranium producer, accounting for 11.61% of world production.
My hedge fund buddies are piling into this stock because the nuclear renaissance is just getting started. The electrification of our energy sources is creating immense demand for new electric power sources. China alone plans to build 115 new nuclear power plants, putting new upward pressure on fuel supplies. Also, the world’s largest producer, KazAtomProm in Kazakhstan, just announced an 11% cutback in production because of processing shortages (click here).
Nuclear power is also viewed as a backup for new alternative sources for the days when the sun doesn’t shine and the wind doesn’t blow. Western countries also need to replace Russian supplies of uranium in compliance with sanctions. Even California has moved to extend the life of its sole remaining nuclear power plant at Diablo Canyon by five years (San Onofre and Rio Seco were closed years ago).
Cameco is one of the largest global providers of uranium fuel. Utilities around the world rely on its products to generate safe, reliable, emissions-free nuclear power. The company is meeting the ever-increasing demand for clean, baseload electricity while delivering energy solutions to support the world's net-zero goals. It doesn’t need wind now, the sun to generate nuclear power.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 5 cents with a second order.
This is a bet that Cameco (CCJ) will not fall below $42 by the January 16, 2026, option expiration in 16 months.
Keep in mind that Cameco is one of the most volatile stocks in the market, with an implied volatility in the options of 44%. That means that after a big drop, you should see a bigger rise. You don’t have to buy it today. A greater selloff would be ideal. But it should be at the core of any long-term LEAPS portfolio, and it is selling at bargain prices.
To learn more about the company, please visit their website at https://www.cameco.com/about
I am therefore buying the Cameco (CCJ) January 2026 $40-$42 out-of-the-money vertical Bull Call spread LEAPS at $0.75 or best
Don’t pay more than $1.00, or you’ll be chasing on a risk/reward basis.
Please note that these options are illiquid, and it may take some work to get in or out. Executing these trades is more an art than a science.
Let’s say the Cameco (CCJ) January 2026 $40-$42 out-of-the-money vertical Bull Call spread LEAPS are showing a bid/offer spread of $0.50-$1.50. Enter an order for one contract at $0.50, another for $0.60, another for $0.70 and so on. Eventually, you will enter a price that gets filled immediately. That is the real price. Then, enter an order for your full position at that real price.
Notice that the day-to-day volatility of LEAPS prices is minuscule, less than 10%, since the time value is so great. This means that the day-to-day moves in your P&L will be small. It also means you can buy your position over the course of a month, just entering new orders every day. I know this can be tedious but getting screwed by overpaying for a position is even more tedious.
Look at the math below, and you will see that an 11.40% rise in (CCJ) shares will generate a 167% profit with this position, such is the wonder of LEAPS. That gives you an implied leverage of 14.65:1.
(CCJ) doesn’t even have to get to a new all-time high to make the max profit. It only has to get back to $42, where it traded months ago.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
Here are the specific trades you need to execute this position:
Buy 1 January 2026 (CCJ) $270 calls at………….………$7.75
Sell short 1 January 2026 (CCJ) $280 calls at…………$7.70
Net Cost:………………………….………..………….…...........$0.75
Potential Profit: $2.00 - $0.75 = $1.25
(1 X 100 X $1.25) = $125 or 167% in 16 months.
To see how to enter this trade in your online platform, please look at the order ticket below, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on “How to Execute a Vertical Bull Call Debit Spread” by clicking here at
https://www.madhedgefundtrader.com/ltt-vbcs/
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep-in-the-money spread trades can be enormous.
Don’t execute the legs individually, or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
