When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
February 19, 2025
Fiat Lux
Featured Trade:
(HOW TO HANDLE THE FRIDAY, FEBRUARY 21 OPTIONS EXPIRATION),
(AND MY PREDICTION IS….),
(TESTIMONIAL)
Followers of the Mad Hedge Fund Trader alert service have the good fortune to own three in-the-money options positions that expires on Friday, February 21, and I just want to explain to the newbies how to best maximize their profits.
This involves the:
Current Capital at Risk
Risk On
(NVDA) 2/$90-$95 call spread 10.00%
(VST) 2/$100-$110 call spread 10.00%
Risk Off
(TSLA) 2/$540-$550 put spread -10.00%
Total Net Position 10.00%
Total Aggregate Position 30.00%
Provided that we don’t have a monster move down in the market in two trading days, these positions should expire at their maximum profit points.
So far, so good.
I’ll take the example of the (TSLA) 2/$540-$550 put spread.
Your profit can be calculated as follows:
Profit: $10.00 expiration value - $8.80 cost = $1.20 net profit
(12 contracts X 100 contracts per option X $1.20 profit per option)
= $1,440 or 13.64% in 22 trading days.
Many of you have already emailed me asking what to do with these winning positions.
The answer is very simple. You take your left hand, grab your right wrist, pull it behind your neck, and pat yourself on the back for a job well done.
You don’t have to do anything.
Your broker (are they still called that?) will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, February 24, and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
If you don’t see the cash show up in your account on Monday, get on the blower immediately and find it.
Although the expiration process is now supposed to be fully automated, occasionally, machines do make mistakes. Better to sort out any confusion before losses ensue.
If you want to wimp out and close the position before the expiration, it may be expensive to do so. You can probably unload them pennies below their maximum expiration value.
Keep in mind that the liquidity in the options market understandably disappears, and the spreads substantially widen, when a security has only hours or minutes until expiration on Friday. So, if you plan to exit, do so well before the final expiration at the Friday market close.
This is known in the trade as the “expiration risk.”
One way or the other, I’m sure you’ll do OK, as long as I am looking over your shoulder, as I will be, always. Think of me as your trading guardian angel.
I am going to hang back and wait for good entry points before jumping back in. It’s all about keeping that “Buy low, sell high” thing going.
I’m looking to cherry-pick my new positions going into the next quarter end.
Take your winnings and go out and buy yourself a well-earned dinner.
Well done, and on to the next trade.
You Can’t Do Enough Research
Take those predictions, forecasts, and prognostications with so many grains of salt. They have a notorious track record for being completely wrong, even when made by the leading experts in their fields. In preparing for my autumn lecture series, I came across the following nuggets and thought I’d share them with you. There are some real howlers.
1876 “This 'telephone' has too many shortcomings to
be seriously considered as a means of communication.”
--Western Union internal memo.
1895 “Heavier than air flying machines are impossible.”
--Lord Kelvin, president of the Royal Society.
1927 "Who the hell wants to hear actors talk?"
--H.M. Warner, founder of Warner Brothers.
1943 “I think there is a world market for maybe five computers.”
--Thomas Watson, Chairman of IBM.
1962 “We don't like their sound, and guitar music
is on the way out.”
--Decca Recording Co. rejecting the Beatles, 1962.
1981 “640 kilobytes of memory ought to be enough for anybody.”
--Bill Gates, founder of Microsoft.
Thomas Watson of IBM
The Beatles
A Younger Bill Gates
I don't know what I would do without John Thomas's information. It is informative and entertaining. In the past 2 years, I have almost doubled my portfolio, something I couldn't have done on my own.
As a military member, he has enabled me to ensure that I will not only be able to retire on time but also help my children through college. If things keep going this well, I will be able to pay for their college.
Many blessings to you, John, and your staff.
Warm regards,
Charlie Moniz
US Military, deployed
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Mad Hedge Biotech and Healthcare Letter
February 18, 2025
Fiat Lux
Featured Trade:
(A TALE OF TWO SHOTS)
(GILD), (MSFT)
The smell of antiseptic and sounds of beeping monitors filled the air as I walked through a Tokyo hospital ward back in 1975.
As a fresh UCLA biochemistry graduate working in Japan, I was visiting a friend who had contracted hepatitis B - a common affliction in Asia at the time.
Little did I know that decades later, I'd be analyzing a company that would revolutionize not just hepatitis treatment, but potentially end the AIDS epidemic as we know it.
That company is Gilead Sciences (GILD), and they just delivered a knockout Q4 that has Wall Street's attention.
But the real story here isn't in the numbers - though believe me, we'll get to those. It's about what's coming next.
Last week, Gilead reported Q4 revenue of $7.57 billion, beating estimates by $420 million. Not too shabby for a company some analysts had written off as past its prime.
And here’s another thing that got my attention: their new HIV prevention treatment, lenacapavir, achieved something I've rarely seen in four decades of following biotech - a standing ovation at the AIDS 2024 conference.
Why? Because it worked. Not just worked - it was 100% effective in one trial and 99.9% in another.
For perspective, that's like pitching a perfect game in the World Series, twice. And instead of daily pills, we're talking about two shots per year.
The FDA is expected to weigh in by summer 2025, and after seeing results like these, I'd bet my vintage Japanese sake collection on approval.
The numbers tell quite a story. Gilead's HIV franchise grew 16% year-over-year, with their flagship drug Biktarvy now commanding over 50% market share.
Even with Medicare Part D changes taking a $1 billion bite out of 2025 revenues (thanks, IRA), management still guided for $28.2-28.6 billion in revenue.
That's not just maintaining course - that's sailing straight through a hurricane without spilling your coffee.
Their oncology business isn't sleeping either. Trodelvy hit $1.3 billion in 2024 sales, up 19% from last year.
Their cell therapies Yescarta and Tecartus are performing like seasoned kabuki actors, bringing in $390 million and $98 million respectively in Q4.
On top of these, Gilead has over 50 clinical programs running simultaneously.
For those keeping score at home, that's more shots on goal than a World Cup final. And they don't face any major patent cliffs until late 2033 - practically an eternity in biotech years.
Speaking of shots on goal, let's talk about that stock price.
Shares have climbed from $71 to around $100 since my last recommendation. Not bad, but given what's in the pipeline, I think we're still in the early innings here.
The company's latest breakthrough, Livdelzi for liver disease, already pulled in $30 million in its first quarter.
Some analysts are talking about $2 billion in peak sales - and having seen my share of liver disease cases during my time in Asia, I wouldn't be surprised if they're being conservative.
Looking ahead to 2025, Gilead has several potential catalysts.
Two major Trodelvy trial readouts, potential lenacapavir approvals worldwide, and expansion into new markets.
They've come a long way since their Harvoni glory days of 2015, transforming from a one-hit wonder into a diversified powerhouse.
Is the stock cheap? Not as cheap as when I first recommended it. But with lenacapavir looking like it could change the game in HIV prevention, this feels like watching Microsoft (MSFT) in the early days of Windows - you know something big is coming, even if you can't quite see the whole picture yet.
The last time I saw scientific results this promising was during China's opening up in the late 1970s, when decades of isolated research suddenly became available to the world.
As for my friend from that Tokyo hospital? He recovered fully, thanks to medical advances that seemed impossible at the time.
Today's impossibilities have a funny way of becoming tomorrow's breakthroughs - and that's exactly why I'm rating Gilead a strong buy on any dips.
