Mad Hedge Biotech & Healthcare Letter
June 29, 2021
Fiat Lux
FEATURED TRADE:
(BREAKING NEW GROUND WITH THIS BIOTECH STOCK)
(NTLA), (REGN), (PFE), (ALNY), (EDIT), (CRSP)
Posts
The biotechnology world started the week right with a milestone announcement from its gene therapy sector.
Intellia Therapeutics (NTLA), along with its partner Regeneron (REGN), developed a potential cure for a genetic liver disease that previously had no cure.
Using the Nobel Prize-winning Crispr technology, Intellia was able to come up with the first-ever treatment for a disease that had been known to be extremely progressive and even fatal.
This achievement has been described to “open up a whole new area of therapies for patients that wasn't there.”
This is because instead of simply treating the symptoms of particular diseases, Intellia was able to demonstrate that it is possible to use gene editing to come up with a cure.
As expected, shares of Intellia shot up the moment the news broke, rising by 40% by the start of the week.
While this is definitely an incredible update for its investors, what’s even more impressive is the fact that this achievement marks the beginning of a revolution in the way we treat diseases.
Intellia’s treatment, called NTLA-2001, is delivered intravenously into the patient’s body. It’s designed to specifically target a progressive form of liver disease called ATTR amyloidosis. This disorder, while rare, is often fatal.
Right now, there are two companies working on this fast-growing segment. Pfizer (PFE) has Vyndagel and Vyndamex, while Alynlam Pharmaceutical (ALNY) has Onpattro. All these treatments are administered through infusions.
At this point, Alnylam holds the gold standard for ATTR treatment with Onpattro, as it delivers 80% capacity for blocking harmful proteins and reducing blood levels. Patients also need to go in every three weeks for dosing.
In comparison, Intellia’s NTLA-2001 is a one-time treatment. That in itself is a massive advantage for the company.
To add to that lead, Intellia’s candidate also showed an ability to drop protein levels by as high as 96% within just a matter of weeks, with no adverse side effects observed in patients.
This is possibly because the gene therapy was delivered directly to the patient’s liver, which is the source of the issue.
While the results are already promising, Intellia believes that it can achieve better outcomes in the future. According to its researchers, the company is looking into using a bone marrow delivery system to boost the efficacy rate of NTLA-2001.
So far, Intellia has received additional funding via a grant from the Bill & Melinda Gates Foundation to pursue the bone marrow delivery system idea.
If that works out, then the same system can be used to develop treatments for reverse sickle cell anemia and even cover other cardiovascular indications.
Although there’s still no word about the pricing for NTLA-2001, we can use Onpattro as reference for now. Alnylam’s treatment is priced at roughly $450,000 annually.
ATTR holds a fairly huge market. Going back to 2020, Onpattro generated over $300 million in revenue and is estimated to rake in more than $400 for 2021.
Considering that Intellia offers a one-and-done option, we can reasonably assume that the demand would be much higher for NTLA-2001.
Overall, ATTR’s total addressable market is estimated to be at $15 billion. However, ATTR is only the tip of the iceberg.
Studying the liver alone would reveal several genetic diseases that Intellia could address with its technology. Other than those, Crispr could still be applied to dozens of disorders linked to solid tumors.
In fact, the market for solid tumors is actually where the fortunes lie in the gene-editing field, with the sector projected to grow to $424.6 billion by 2027.
Another lucrative market is the genetic disorder segment, with estimated sales anticipated to reach $47.7 annually by 2023.
So far, there appear to be only three companies focused on utilizing Crispr technology to develop cures for these diseases: Intellia, Editas Medicine (EDIT), and of course, CRISPR Therapeutics (CRSP).
Considering the incredibly broad market and the limited number of companies addressing these needs, I say there’s more than enough room for all of them to flourish.
If Intellia continues to discover ways to effectively treat these, then this biotechnology company will not only be considered a godsend to humanity as a whole but also transform into a waterfall of cash for its shareholders.
AbbVie (ABBV) is the seventh biggest biopharmaceutical company worldwide in terms of revenue.
If you’re on the lookout for stocks that also offer juicy dividends, then this is a good company to add to your list alongside Dividend Aristocrats like Johnson & Johnson (JNJ) and Pfizer (PFE).
Since its split from Abbott Labs (ABT) back in 2013, AbbVie has increased its revenue by roughly 2.5 times.
In just a few years post-spin-off, its profits have grown from $18.8 billion to an impressive $46 billion in the last fiscal year.
A huge chunk of AbbVie’s growth is attributed to its blockbuster drug Humira, which is the number one selling drug in 2020 with a whopping $19.8 billion in net revenue.
That’s why it comes as no surprise that the drug’s impending loss of patent exclusivity in the US in 2023 is a major pain point for AbbVie investors.
However, it looks like AbbVie has positioned itself well into a future without Humira.
Although Humira does lead AbbVie’s immunology portfolio, the company’s other products in this lineup are also promising.
Up-and-coming drugs Skyrizi and Rinvoq both reported doubled annual sales from 2019 to 2020, with the two expected to bring in $15 billion by 2025.
Actually, Rinvoq is slated as the successor to Humira and is groomed as a “key growth driver” through 2026.
Putting money where its mouth is, AbbVie has performed notably in the first quarter of 2021 with a 50% increase from its 2020 net revenue to hit over $12.94 billion.
Its net profit also saw a double-digit bump of 18% to reach $3.55 billion.
Despite off-patent woes, Humira still enjoyed a 3.5% uptick in sales to rake in $4.9 billion for the quarter.
Meanwhile, AbbVie’s aesthetic product line showed off an impressive 35% jump during the period, adding over $1.1 billion to revenue.
Reflecting the good news this quarter, AbbVie boosted its profitability guidance for 2021.
From an adjusted per-share net profit in the range of $12.32 to $12.52, the company now estimates it to be somewhere between $12.37 and $12.57.
Diversification has also been explored, with AbbVie veering from immunology and venturing into other segments like oncology, eye care, neuroscience, and even aesthetics.
One way AbbVie has been filling the Humira revenue gap is via acquisitions.
In 2015, the company acquired Pharmacyclics. This deal added a blockbuster drug, Imbruvica, in AbbVie’s lineup.
In 2020, Imbruvica generated roughly $4.7 billion in sales.
With an estimated compound annual growth rate of 26.5%, Imbruvica is projected to reach approximately $31.8 billion in sales through 2025.
On top of that, AbbVie has filed a slew of patents to restrict generic competition against Imbruvica until at least 2035.
Another major acquisition is Allergan, which added roughly 120 new products under AbbVie’s banner following the deal’s completion in May 2020.
Collectively, these products brought in $16 billion in sales in 2019 for Allergan—a noteworthy performance that translated to AbbVie’s 2020 revenue, which grew from $33 billion in 2019 to $45.8 billion a year later.
Perhaps the most notable addition from the Allergan acquisition is Botox.
In 2019, this drug raked in roughly $2.7 billion in sales. Similar to Imbruvica’s potential, Botox also presents a powerful growth runway.
In fact, this Allergan blockbuster is estimated to generate more than $13.4 billion in revenue by 2026.
Apart from the additional 120 products it injected into AbbVie’s portfolio, Allergan also queued 60 more development programs, which could generate at least $2 billion in sales by 2023.
AbbVie is one of the more innovative and newer biopharmaceutical companies to take the biotechnology and healthcare market by storm. Given the company’s strong pipeline programs, it’s definitely poised for more robust growth.
Spun off from Abbott Labs in 2013, this company currently sits at a massive market capitalization of roughly $205 billion.
If its portfolio, pipeline programs, acquisitions, and recent first-quarter earnings reports can tell us anything, it’s that AbbVie still has a lot of room to grow. Hence, it’s good to buy the dip.
Mad Hedge Biotech & Healthcare Letter
May 13, 2021
Fiat Lux
FEATURED TRADE:
(THE HOLY GRAIL OF DIABETES)
(NVO), (LLY), (SNY), (BNTX), (CRSP), (EDIT), (NTLA)
Diabetes and obesity continue to be two of the major health issues across the globe—and these problems are only getting worse.
There are about 463 million people worldwide afflicted with diabetes, with only half of this number actually diagnosed and even fewer seeking treatment.
This situation is alarming considering that diabetes is a major cause of diseases like heart attacks, stroke, blindness, kidney failure, and even amputation of the lower limb.
The key to handling diabetes for many diabetics is taking insulin, which is a hormone that aids in regulating the amount of glucose in the patient’s blood.
To date, only 16% of diabetics take insulin.
Interestingly, there are only a handful of producers of this drug despite the fact that the global spending for insulin is estimated to reach $28 billion by 2026.
Only three companies practically control over 90% of the insulin market. That dominance, along with the absence of generic competition, allowed them to generously reward their shareholders.
Currently, one company is dominating the insulin market and holds a virtual monopoly of this lucrative industry: Novo Nordisk (NVO).
In fact, Novo Nordisk shares have increased by over 2,500% since 2000—an honest to goodness wealth-building investment.
For years, Novo Nordisk has focused on developing products specifically for diabetes and obesity.
Thanks to its efforts in these sectors, the company has become the undisputed leader with a 44.5% share of the insulin market and a 49.9% share of the blood sugar drug GLP-1 market.
In 2018 alone, Novo Nordisk generated roughly $14.26 billion in revenue from its diabetes lineup.
In comparison, the second largest producer of these products, Eli Lilly (LLY), generated only $9.71 billion.
Meanwhile, the third challenger in this space, Sanofi (SNY), began its exit from the diabetes industry when the pandemic struck last year.
At this point, Novo Nordisk holds 29.2% of the global diabetes market, making the company within arm’s reach of its goal to conquer one-third of the segment by 2025.
Amid its success in the industry, Novo Nordisk refuses to rest on its laurels. The company continues to come up with innovative treatments for diabetes and obesity.
Novo Nordisk’s latest product is Rybelsus, which is an oral medication for blood sugar, particularly for Type 2 diabetes patients.
In an effort to corner the market, Rybelsus is actually a direct competitor of Novo Nordisk’s own products, Ozempic and Victoza, which target the same market. The difference is that the new product can be taken orally while the two older ones need to be injected into the bloodstream.
When Ryblesus was launched in late 2020, it was hailed as the “holy grail” of diabetes treatments and generated $64.5 million in the first six months.
To understand the potential of Rybelsus, it’s good to remember the growth story of Ozempic.
From $264 million in sales in 2018, this drug skyrocketed to rake in $1.7 billion by 2019 and generated $1.1 billion in the first half of 2020.
Although diabetes clearly holds the bulk of Novo Nordisk’s portfolio, it’s not the sole revenue stream for the company.
In the past years, Novo Nordisk has also been developing treatments for chronic obesity—a condition that could lead to serious diseases, including various types of cancer and heart disorders.
Global obesity has roughly tripled since 1975, with the COVID-19 pandemic accelerating this alarming trend.
For context, 1.9 billion adults were diagnosed as overweight in 2016. Of these, 650 million were considered obese.
More alarmingly, only 2% of 650 million people suffering from obesity are receiving any medical treatment.
In relation to Novo Nordisk’s revenue stream, this offers notable potential for future revenues for the segment.
The company’s flagship obesity drug, Saxenda, has shown extremely strong growth in terms of market share as well as total revenue since its launch.
With incredible attention focused on groundbreaking treatments for diabetes like messenger RNA from companies like BioNTech (BNTX), CRISPR Therapeutics (CRSP), Editas Medicines (EDIT), and Intellia Therapeutics (NTLA), it’s understandable to find a company established in the 1920s extremely boring.
However, it’s important to always keep in mind what investing is truly about. It’s distributing your money to businesses that have the capacity and potential to grow over the long term.
This is what sets apart companies like Novo Nordisk.
Historically, Novo Nordisk has been giving back to its shareholders for decades.
Since it debuted in the US market in 1981, the company has returned roughly 22,000% to its investors.
Four decades later, shareholders can rest easy and expect continuous rewards in the years to come. So, take advantage of this opportunity and buy the dips.
Mad Hedge Biotech & Healthcare Letter
May 11, 2021
Fiat Lux
FEATURED TRADE:
(A FALLEN BIOTECH OUTPERFORMING THE MARKET)
(VRTX), (ABBV), (CRSP), (BLUE)
Despite the exceptional performance of a handful of biotechnology companies, many healthcare stocks have languished over the course of the last 12 months due to the extra costs and added uncertainty brought by the COVID-19 pandemic.
Amid its continuous success for almost a decade, with shares climbing by over 800% from 2012 to mid-2020 and outpacing the S&P 500 nearly four times over, Vertex Pharmaceuticals (VRTX) stock was not spared during this turbulent period.
In fact, shares of the company fell by roughly 25% in mid-October following their decision to cancel the development of VX-814.
This once-promising drug, which was initially expected to treat a genetic disorder affecting the liver and kidney, showed disappointing results in its trials last year.
Despite falling out of favor with investors, I think this $55.66 billion-by-market-capitalization biotechnology company holds a strong track record and remains a compelling buy—a fact proven by its first quarter earnings report.
Vertex recorded $1.72 billion in revenue for the first quarter of 2021, showing off a 14% year-over-year jump and topping the projected estimate from analysts of $1.66 billion.
The company also reported a notable improvement on its bottom line, with an adjusted net income of $781 million or $2.98 per share.
In comparison, Vertex recorded $674 million in earnings or $2.56 per share during the same period in 2020.
This embattled biotechnology company marked the end of the first quarter with a total of $6.9 billion in cash, cash equivalents, and marketable securities, exhibiting a $265 million increase from the end of 2020.
Although Vertex anticipates a slowdown in its revenue growth this year, it still projects a full-year sale in the range of $6.7 billion and $6.9 billion.
To see if this is realistic, let’s take a look at the company’s current drug portfolio.
The core of Vertex’s business is its cystic fibrosis (CF) lineup. Without treatment, this disease could lead to the early death of patients.
At the moment, Vertex has four approved CF drugs out in the market: Kalydeco, Orkambi, Symdeko, and Trikafta.
With the extent of patient profiles that these four drugs cover, Vertex has virtually cornered the CF market and established a monopoly.
To date, roughly 50% of cystic patients in the US, Australia, Canada, and Europe are treated using Vertex drugs.
Among the four, Trikafta appears to have the potential to become a blockbuster.
Trikafta is forecasted to take the lion’s share in the CF market in the next few years, with its revenue rising from $3.8 billion to $8.9 billion by 2026. This would translate to a growth in Vertex’s CF program from $6.2 billion to $9.6 billion.
While skeptics might assume that the growth projection is too high, it’s important to remember the trajectory of the Trikafta-Kaftrio drug.
The revenue of this combo grew from $420 million in 2019 to a whopping $3.86 billion in 2020.
Given that CF has become a lucrative market, it no longer comes as a surprise that competitors are starting to swarm the space.
Vertex’s biggest rival in the space so far is AbbVie (ABBV), which has been working on triple combinations of its own drugs.
Apart from its CF programs, Vertex’s pipelines also serve as catalysts for its growth.
Although VX-814 failed and caused the company’s shares to fall in 2020, Vertex has another candidate, VX-864, which has been showing more promising results as of late.
You might be wondering why Vertex insists on working on this drug despite the backlash it suffered last year. This is primarily rooted in the potential of the product.
VX-864, if successful, could be the next CF-like moneymaker for Vertex. By 2026, sales for this drug are estimated to reach $640 million and will peak by 2030 at $1.1 billion.
On top of these, Vertex has collaborated with CRISPR Therapeutics (CRSP) to develop gene therapy for sickle cell disease. So far, the treatment has received a fast-track designation from the FDA.
If approved, their drug, CTX-001, will directly compete with bluebird bio’s (BLUE) LentiGlobin.
The current pricing for bluebird’s therapy is $1.2 million.
To date, there are roughly 250,000 patients suffering from sickle cell disease in the US and Europe. Among them, 25% are diagnosed to be in the severe stages. This is the market that CTX-001 aims to target.
Using the pricing of LentiGlobin as the basis, CTX-001 has the potential to reach $1.6 billion in sales in 2026 and peak at $2 billion in 2029.
If the two companies succeed in this, then CTX-001 is another blockbuster drug added to Vertex’s portfolio.
Overall, Vertex is a good long-term investment stock. It has a proven track record and a healthy pipeline filled with promising candidates. I say you should take advantage and buy the dips.
Global Market Comments
April 30, 2021
Fiat Lux
Featured Trade:
(APRIL 28 BIWEEKLY STRATEGY WEBINAR Q&A),
(PFE), (MRNA), (USO), (DAL), (TSLA), (CRSP), (ROM), (QQQ), (T), (NTLA),
(EDIT), (FARO), (PYPL), (COPX), (FCX), (IWM), (GOOG), (MSFT), (AMZN)
Below please find subscribers’ Q&A for the April 28 Mad Hedge Fund Trader Global Strategy Webinar broadcast from Silicon Valley, CA.
Q: There is talk of digital currencies being launched in the US. Is there any truth to that? How would that affect the dollar?
A: There is no truth to that; there is not even any serious discussion of digital currency at the US Treasury. My theory has always been that once Bitcoin works and is made theft-proof, the government will take it over and make that the digital US dollar. So far, Bitcoin has existed regulation-free; in fact, the IRS is counting on a trillion dollars in capital gains being taxed going forward in helping to address the budget deficit.
Q: If you have a choice, what’s the best vaccine to get?
A: The best vaccine is the one you can get the fastest. I know you’re a little slow on the rollout in Canada. Go for Pfizer (PFE) if you’re able to choose. You should avoid Moderna (MRNA) because 15% of people getting second shots have one-day symptoms after the second shot. But basically, you don’t get to choose, only kids get to choose because only Pfizer has done trials on people under the age of 21. So, if you take your kids in, they will all get Pfizer for sure.
Q: Should I buy Freeport McMoRan (FCX) here or wait for a bigger dip?
A: Freeport has just had a 25% move up in a week. I wouldn’t touch that. We put out the trade alert when it was in the mid $30s, and it's essentially at its maximum profit point now. So, you don't need to chase—wait for a bigger dip or a long sideways move before you get in.
Q: How do I trade copper if I don't do futures?
A: Buy (FCX), the largest copper producer in the US, and they have call options and LEAPS. By the way, if we do get another $5 dip in Freeport, which we just had, I would really do something like the (FCX) $45-$50 2023 LEAP. You can get 5 times your money on that.
Q: Time to buy oil stocks (USO) for the summer?
A: No, the big driver of oil right now is the pandemic in India. They are one of the world's largest consumers—you find out that most poor countries are using oil right now as they can’t afford the more expensive alternative sources of power. And when your biggest customer is looking at a billion corona cases, that’s bad for business. Remember, when you trade oil, you’re trading against a long-term bear trend.
Q: Would you buy Delta Airlines (DAL) at today’s prices?
A: Yes, I’m probably going to go run the numbers on today's call spread; I actually have 20% of cash left that I could spend. So that looks like a good choice—summer will be incredible for the entire airline industry now that they have all staved off bankruptcy. Ticket prices are going to start rising sharply with an impending severe aircraft shortage.
Q: What are your thoughts on the Buffet index which shows that stocks are more stretched vs GDP at any time vs 2000?
A: The trouble with those indicators is that they never anticipated A) the Fed buying $120 billion a month in US Treasury bonds, B) the Fed promising to keep interest rates at zero for three years, and C) an enormous bounce back from a once-in-a-hundred-year pandemic. That's why not just the Buffet Index but virtually all technical indicators have been worthless this year because they have shown that the market has been overbought for the last six months. And if you paid attention to your indicators, you were either left behind or you went short and lost your shirt. So, at a certain point, you have to ignore your technical indicators and your charts and just buy the damn market. The people who use that philosophy (and know when to use it, and it’s not always) are up 56% on the year.
Q: What trade categories are getting fantastic returns? It’s certainly not tech.
A: Well, we actually rotated out of tech last September and went into banks, industrial plays, and domestic recovery plays. And you can see in the stocks I just showed you in our model portfolio which one we’re getting the numbers from. Certainly, it was not tech; tech has only performed for the last four weeks and we jumped right back in that one also with positions in Microsoft (MSFT). So yes, it’s a constantly changing game; we’re getting rotations almost daily right now between major groups of stocks. The only way to play this kind of market is to listen to someone who’s been practicing for 52 years.
Q: I am 83 years old and have four grandchildren. I want to invest around $20,000 with each child. I was thinking of your bullish view on Tesla (TSLA) on a long-term investment. Do you agree?
A: If those were my grandchildren, I would give them each $20,000 worth of the ProShares Ultra Technology Fund (ROM), the 2x long technology ETF. Unless tech drops 50% from here, that stock will keep increasing at twice the rate of the fastest-growing sector in the market. I did something similar with my kids about 20 years ago and as a result, their college and retirement funds for their kids have risen 20 times. So that’s what I would do; I would never bet everything on a single stock, I would go for a basket of high-tech stocks, or the Invesco QQQ NASDAQ Trust (QQQ) if you don’t want the leverage.
Q: Do you like Amazon (AMZN) splitting?
A: I don’t think they’ll ever split. Jeff Bezos worked on Wall Street (with me at Morgan Stanley) and sees splits as nothing more than a paper shuffle, which it is. It’s more likely that he’ll break up the company into different segments because when they get to a $5 trillion market cap, it will just become too big to manage. Also, by breaking Amazon up into five companies—AWS, the store, healthcare, distribution, etc., —you’re getting a premium for those individual pieces, which would double the value of your existing holdings. So, if you hold Amazon stock, you want it to face an antitrust breakup because the flotation will double the value of your total holdings. That has happened several times in the past with other companies, like AT&T (T), which I also worked on.
Q: When is Tesla going to move and why is it going up with earnings up 74%?
A: Well, the stock moved up a healthy 46% going into the earnings; it’s a classic sell the news market. Most stocks are doing that this quarter and they did so last quarter as well. And Tesla also tends to move sideways for years and then have these explosive moves up. I think the next double or triple will come when they announce mass production of their solid-state batteries, which will be anywhere from 2 to 5 years off.
Q: How can I renew my subscription?
A: You can call customer support at 347-480-1034 or email support@madhedgefundtrader.com and I guarantee you someone will get back to you.
Q: Top gene-editing stock after CRISPR Therapeutics (CRSP)?
A: There are two of them: one is Intellia (NTLA); it’s actually done better than CRISPR lately. The second is Editas (EDIT) and you’ll find out that the same professionals, including the Nobel prize winner Jennifer Doudna here at Berkeley, rotate among all three of these, and the people who run them all know each other. They were all involved in the late 2000's fundamental research on CRISPR, and they’re all frenemies. So yes, it's a three-company industry, kind of like the cybersecurity industry.
Q: What about PayPal (PYPL)?
A: I would wait for the earnings since so many companies are selling off on their announcements. See if they sell off 3-5%, then you buy it for the next leg up. That is the game now.
Q: Do you like any 3D printing stocks like Faro Technologies (FARO)?
A: No, that’s too much of a niche area for me, I’m staying away. And that's becoming a commodity industry. When they were brand new years ago, they were red hot, now not so much.
Q: Do you see the chip companies continuing their bull run for the next few months?
A: I do. If anything, the chip shortage will get worse. Each EV uses about 100 chips, and they’re mostly the low-end $10 chips. Ford (F) said production of a million cars will be lost due to the chip shortage. Ford itself has 22,000 cars sitting in a lot that are fully assembled awaiting the chips. Tesla alone has $300 worth of chips just in its inverters, and there are two inverters in every car. So, when you go from production of 500,000 cars to a million in one year, that's literally billions of chips.
Q: The airlines are packed; what are your thoughts?
A: Yes, one of the best ways to invest is to invest in what you see. If you see airlines are packed, buy airline stocks. If you can’t hire anyone, you know the economy is booming.
Q: What about the Russel 2000 (IWM)?
A: We covered it; it looks like it wants to break out to new highs from here. By the way, there are only 1,500 stocks left in the Russell 2000 after the pandemic, mergers, and bankruptcies.
Q: Are there other ways to play copper out there like (FCX)?
A: Yes; one is the (COPX)— a pure copper futures ETF. However, be careful with pure metal ETFs of any kind because they have huge contangos and you could get a 50% move up in your commodity while your ETF goes down 50% over the same time. This happens all the time in oil and natural gas, and to a lesser degree in the metals, so be careful about that. Before you get into any of these alternative ETFs, look at the tracking history going back and I think you'll see you're much better off just buying (FCX).
Q: How long do you typically hold onto your 2-year LEAPS? Based on my research, the time decay starts to accelerate after about 3 months to one year on LEAPS.
A: Actually, with LEAPS, the reason I go out to two years is that the second year is almost free, there's almost no extra cost. And it gives you more breathing room for this thing to work. Usually, if I get my timing right, my LEAP stocks make big moves within the first three months; by then, the LEAP has doubled in value, and then you have to think about whether you should keep it or whether there are better LEAPS out there (which there almost always are). So, you sell it on a double, which only took a 30% move in the stock, or you may be committed to the company for the long term, like a Microsoft or an Amazon. And then you just run it through the expiration to get a 400% or 500% profit in two years. That is how you play the LEAP game.
Q: Are these recorded?
A: Yes, we record these and we post them on the website after about 2 hours. Just log into the site, go to “my account”, then select your subscription type (Global Trading Dispatch or Technology Letter), and “webinars” will be one of the button choices.
Q: Can you also sell calls on LEAPS?
A: Yes and the only place to do that is the US Treasury market (TLT). There you either want to be short calls far above the market, out two years, or you want to be long puts. And by the way, if you did something like a $120-$125 put spread out to January 2023, then you’re looking at making about a 400% gain. That is a bet that 20-year interest rates only go up a little bit more, to 2.00%. If you really want to bet the ranch, do something like a $120-$122 and you might get a 1000% return.
Q: What is the best LEAP to trade for Microsoft (MSFT)?
A: If you want to go out two years, I would do something like a June 2023 $290-$300 vertical bull call spread. There is an easy 67% profit in that one on only a 20% rise in the stock. I do front monthlies for the trade alert service, so we always have at least 10 or 20 trade alerts going out every month. And the one I currently have for is a deep in the money May $230-$240 vertical bull call spread which expires in 12 days.
Q: What is the best way to play Google (GOOG)?
A: Go 20% out of the money and buy a January 2023 $2,900-$3,000 vertical bull call spread for $20—that should make about 400%. If you want more specific advice on LEAPS, we have an opening for the Mad Hedge Concierge Service so send an email to support@madhedgefundtrader.com with subject line “concierge,” and we will reach out to you.
To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH or TECHNOLOGY LETTER, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
Good Luck and Stay Healthy.
John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader
I Think I See Another Winner
Mad Hedge Biotech & Healthcare Letter
April 27, 2021
Fiat Lux
FEATURED TRADE:
(THE FUTURE OF MEDICINE)
(CRSP), (VRTX), (EDIT), (NTLA), (PFE), (NVS), (GILD), (RHHBY),
(BMRN), (QURE), (SGMO), (CLLS), (ALLO), (BEAM)