Page 224 - Mad Hedge Fund Trader

October 11, 2024

Jacque's Post

(SUMMARY OF JOHN’S OCTOBER 9, 2024, WEBINAR)

October 11, 2024

Hello everyone

TOPIC

Goldilocks on Steroids

TRADE ALERT PERFORMANCE

+720.99% since inception

+51.62% average annualized return for 16 years

+62.77% Trailing One-Year Return

PORTFOLIO

Risk On

(NEM) 10/$47-$50 call spread 10%

(TSLA) 10/$200-$210 call spread 10%

(DHI) 10/$165-$175 call spread 10%

Risk Off

No Positions

Total Aggregate Position = 30.00%

THE METHOD TO MY MADNESS

Hot September Nonfarm Payroll influences all trades.

All interest rate plays get hit – bonds, foreign currencies, gold, silver, home builders down.

Use this dip to load the boat in all these sectors.

We are unlikely to see a more than 5% drop in indexes for the rest of 2024.

Technology stocks regain the lead.

Energy spikes on Mideast and China recovery.

Buy stocks and bonds on dips, but now in ALL sectors.

THE GLOBAL ECONOMY – CHINA SURPRISE

Nonfarm Payroll reports come in hot, as US employers added 254,000 jobs in September.

Unemployment Rate fell to a three-month low of 4.1%.

US GDP revised up to 5.5% growth since the second quarter of 2020.

The port strike is settled with a 62% six-year settlement. The Strike cost the U.S. economy $5 billion/day, and it will take a month to restart.

EC imposes 45% Tariffs on Chinese EV’s.

ISM Services PMI rose to 54.9 in September from 51.5 in August.

Europe to cut interest rates by 25 basis points in October.

Blockbuster China Stimulus sets stocks on fire.

STOCKS – FROM STRENGTH TO STRENGTH

Stocks race to new all-time highs despite rising rates and Middle Eastern War.

Interactive Brokers starts US Election Forecast Trading. The opening bids were 49% for Harris and 50% for Trump.

Vistra Energy (VST) tops Nvidia as the top S&P 500 stock this year.

Spirit Airlines (SAVE) may file for bankruptcy.

Hedge Funds stampede into China on news that government agencies promised to pour $1 billion into local stock markets.

Super Micro (SMCI) splits, joining a growing list of semiconductor companies that have split their stocks.

US Car Makers get slaughtered. Avoid (GM) and (F)

Caterpillar (CAT) rallies on China stimulus and housing recovery.

Electrification is the latest hot investment theme.

BONDS – DEMOLISHED

Hot September Nonfarm Payroll demolishes bonds.

Every interest rate play gets hit hard.

Bonds will return to the long-term uptrend when we start to discount the November Fed interest rate cut.

The Yield Curve has De-Inverted, meaning that short-term interest rates have fallen below long-term ones.

Buy (TLT), (JNK), (NLY), (SLRN), and REITS on dips.

FOREIGN CURRENCIES – DOLLAR REBOUND

Dollar gets a sudden new lease on life, as hot September Nonfarm Payroll causes interest rate spike.

Higher interest rates make the US $ much more attractive to traders and investors.

This is a short-term rally only and may be the last chance to sell short the US$.

The long-term downtrend in the dollar is still intact.

There is no way the dollar can stand up to cuts down to 3.0% by summer.

Buy (FXA), (FXE), (FXB), and (FXY).

ENERGY & COMMODITIES – OIL SPIKE

Middle East war plus Biden comments on possible Israeli bombing of Iran oil facilities give oil best week in years.

Iran produces 3 million barrels a day, 90% of which goes to China.

Its sudden loss would take oil to $95 overnight.

Saudi Arabia has 3 million barrels/day in reserve production, but it would take months to bring online.

That’s why Israel won’t attack Iran’s oil supplies, so its weapon suppliers don’t see energy supplies disrupted.

Nuclear facilities and missile factories are much more likely targets.

John’s Cameco (CCJ) trade alert rallied strongly, up 25% in two weeks.

The nuclear trade is still on, with all plays hitting new highs.

PRECIOUS METALS – NEW HIGHS

Gold hits a new high at $2,668 an ounce as hedge funds pour in.

Seasonals for the barbarous relic are now the most positive of the year.

Gold holding up in the face of big interest rate rises shows it only wants to go up.

Escalation of Middle East war is very pro-gold.

Will This Crisis Take Gold to $3000? Almost certainly, yes.

The next problem? What to do when gold hits $3000?

Most likely, it keeps going up to $4,500, as the Chinese have nowhere else to save.

Buy (GLD), (SLV), (AGQ), and (WPM) on dips.

REAL ESTATE – GUT PUNCH

US Home Sales Plunge, down 4.7% in August.

Mortgage Interest rates made it down to 6.07%, then popped to 6.50%.

Buyers are clearly remaining patient amid steadily declining mortgage rates.

New single-family home sales decreased last month to an annualized rate of 716,000 after rising at the fastest pace since early 2022.

The median sales price, meantime, decreased 4.6% from a year earlier to $420,000.

That marked the seventh straight month of annual price declines, extending what was already the longest streak since 2009.

Real estate should pick up once lower interest rates feed through again.

TRADE SHEET

Stocks – buy the next big dip

Bonds – buy dips

Commodities – buy dips

Currencies – sell dollar rallies, buy currencies

Precious Metals – buy dips

Energy – buy dips

Volatility – sell over $30

Real Estate – buy dips

NEXT STRATEGY WEBINAR

12:00 EST Wednesday, October 23, from Lake Tahoe, Nevada.

RECORDING OF JACQUIE’S POST OCTOBER 6, 2024, ZOOM MONTHLY MEETING.

https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-september-2024/

Cheers

Jacquie

October 11, 2024

Diary, Newsletter, Summary

Global Market Comments
October 11, 2024
Fiat Lux

Featured Trade:

(THE MAD HEDGE SEPTEMBER 17-19 SUMMIT REPLAYS ARE UP),
(OCTOBER 9 BIWEEKLY STRATEGY WEBINAR Q&A),
(TLT), (IWM), ($VIX), (DUK), (NEE), (GLD), (FCX), (BHP), (USO)

The Mad Hedge September 17-19 Summit Replays are Up

Diary, Newsletter

Listen to all 22 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.

The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here.

We look forward to working with you and the next summit is scheduled for December.

October 9 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the October 9 Mad Hedge Fund Trader Global Strategy Webinar, broadcast from Lake Tahoe, Nevada.

Q: Is the iShares 20+ Year Treasury Bond ETF (TLT) a buy here?

A: I think we are testing the 200-day moving average, which is at 92.75. Let’s see if that holds, and if it does, we want to do at-the-money LEAPS one year out because the Fed has basically said it’s going to keep lowering interest rates until June, and bonds can’t lose on that. That would also be a nine-point pullback from the recent high.

Q: I found a YouTube video about your Uncle Mitchell Paige, who won the first Medal of Honor in WWII.

A: Yes, there’s a ton of stuff on the internet about Uncle Mitch, even though he passed away 22 years ago. There’s even a Mattel G.I Joe version of Uncle Mitch that you can buy, which he gave me. I also inherited his samurai swords.

Q: When will small caps turn around?

A: That’s the iShares Russell 2000 (IWM). Small caps are joined at the hips with interest rates, so when interest rates go up, and bond prices go down, small caps also go down. That is because small caps are much more dependent on borrowed money than any other section of the market, 60% lose money, 40% are regional banks, and they have much weaker credit ratings. They are a leverage play on everything going great—when interest rates are rising, they aren’t great. I would hold off on the (IWM). Even when interest rates start going back down again, which I expect they will do going into the next Fed meeting, (IWM) will be about number ten on the list of interesting things to do.

Q: The hiring numbers were great with the nonfarm payroll on Friday, so will the recession be pushed back to 2026?

A: I don’t think we’re going to have a recession. I think we have a growth scare, a growth slowdown, and then we reaccelerate again as more companies start booking AI profits to their bottom lines. Also, the recovery of China would be nice, recovery of Europe would be nice—so there are many other factors at play here. The fact is the United States has the world’s strongest economy, and we are going from strength to strength. That’s why everybody in the world is sending their money over here.

Q: Do you expect heightened volatility going into the year-end?

A: I expect heightened volatility going into the election; after that, it may collapse. Right now, the Volatility Index ($VIX) is in the low $20s, which is the high end of the recent range. I expect that to fall, and then we get a ballistic market after the election once all the uncertainty is gone.

Q: Should I buy utilities and industrials now?

A: Yes, these are two of the most interest-sensitive sectors in the market—especially utilities, which are very heavy borrowers. They’ve already had tremendous runs—things like Duke Energy (DUK) and NextEra (NEE). However, I think I’m going up more if we’re going to get interest rates down to 3%. Even if we get them down to 3.5 or 4%, the rallies in all the interest-sensitive sectors will continue.

Q: If the global economy recovers, would that lead to increased inflation and an increase in interest rates?

A: In an old-fashioned economy—one driven by, for instance, the car industry—yes, that would be happening. Back then, wage settlements with the United Auto Workers had the biggest impact on your portfolio. In the modern economy, technology is dropping prices so fast that even during periods of high growth, prices are still falling. The example I give is: the cheapest PC you could get in 1990 cost $5,000, which was a Compact. Now you could get the same computer for $300. You can bet going forward that eliminating all port workers will also be highly disinflationary; we won’t have to pay those $200,000 salaries for port workers, so that goes to zero. You can cite literally hundreds of examples in the economy where technology is collapsing prices.

Q: Should I go with a safe strategy now or increase my risk?

A: I think if we don’t sell off in the next two weeks, you have to buy the hell out of the market because we have had every excuse to sell off, and the market just won’t do it. Middle Eastern war, uncertainty in the election, gigantic hurricanes which will definitely shrink economic growth this year, the port strike and the Boeing strike, which will take a month out of GDP growth on the coast—and it still won’t go down. So, if you throw bad news on a market and it still won’t go down, you buy the heck out of it. The last chance for this to go down is literally this month. After that, the seasonals turn strongly positive. What’s the opposite of “sell in May, and go away”? It’s “buy in October and ring the cash register.”

Q: Will gold (GLD) go to 3,000/oz soon?

A: Yes. That’ll happen on the next Fed interest rate cuts as we go into the end of the year. We'll probably get two more cuts of 25 basis point cuts. Gold loves that. And guess what? Chinese have nowhere else to save their money except gold. So, yes, I'm looking for $3,000 and then $4,500 after that. You definitely want to own gold.

Q: Should I dump Chinese (FXI) stocks after this short-term spike?

A: Yes, for the short term, but not for the long term. Some kind of recovery will come, because if this Chinese stimulus package fails, they'll bring another one, and you'll get another one of those monster rallies. So, if you're a long-term holder, then I would stay in. The blue-chip stocks are incredibly cheap. But I still believe the best China plays are in the US, in oil (USO), copper (FCX), iron ore (BHP), and gold (GLD).

Q: Is oil headed down after the Israel and Lebanon war?

A: That really isn’t the main factor in the oil market. These people have been fighting for a century, literally, and any geopolitical influence has not had any sustainable impact on the price of oil. Really, the sole driver for oil prices now is China. You get China back in the game, oil goes back to $95 a barrel. If China remains in recession, then oil stays low and goes back to the $60s. It’s purely a China play. The US economy will continue to grow, but most of our oil consumption is domestic now—we are the world’s largest oil producer at 13.5 million barrels a day. We do not need any Middle Eastern oil anymore, really, we’re just running out our existing contracts.

Q: Do you think cryptocurrencies will have a bull market with the stock market?

A: No, I don’t. Cryptocurrencies did well when we had a liquidity surplus and an asset shortage. Now, we have the opposite; we have a liquidity shortage and an asset surplus, and the theft problem is still rampant with the cryptocurrencies keeping most institutional and individual investors out of that market.

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, select your subscription (GLOBAL TRADING DISPATCH, TECHNOLOGY LETTER, or Jacquie's Post), then click on WEBINARS, and all the webinars from the last 12 years are there in all their glory

Good Luck and Good Trading,

John Thomas
CEO & Publisher
The Diary of a Mad Hedge Fund Trader

October 11, 2024 - Quote of the Day

Diary, Newsletter, Quote of the Day

"Everything is expensive now. Worries about the future can cause safe assets to become highly-priced. I call it the 'Titanic Effect.' When the Titanic was going down, people would pay a fortune for anything that floats. We may be in a Titanic situation now," said my buddy, Nobel Prize winner Robert Shiller.

October 10, 2024

Biotech Letter

Mad Hedge Biotech and Healthcare Letter
October 10, 2024
Fiat Lux

Featured Trade:

(BUYING TIME)

(MRK), (JNJ)

Buying Time

Biotech Letter

If you've been watching Merck (MRK) lately, you might think the pharmaceutical giant has caught a nasty case of the market flu. After years of being the biotech golden child, Merck's stock has been sliding down the charts faster than a greased pig at a county fair.

But before you start writing eulogies for this pharma powerhouse, let's dig into the nitty-gritty and see if there's still some fight left in this old dog.

First, let's talk about Keytruda. This cancer-fighting wonder drug is Merck's bread and butter, bringing in a whopping $7.3 billion in Q2 2024 alone. That's a 16% year-over-year jump, beating expectations by $100 million.

But here's the rub: Keytruda now accounts for nearly half of Merck's total revenue. It's like having a star quarterback who scores all your touchdowns - great until he sprains an ankle.

And boy, has Keytruda stubbed its toe lately. The FDA's advisory committee gave a thumbs down to expanding its use in certain stomach cancer patients.

Then there's the Phase 3 trial flop in colorectal cancer and two other discontinued trials. It's enough to make even the most bullish investor reach for the Tums.

With Keytruda showing signs of vulnerability, Merck's bigwigs have clearly decided it's time to spread their bets. They're not about to let their golden goose turn into a sitting duck. So, they’ve gone on a buying spree.

EyeBio, Elanco's Aqua business, Harpoon Therapeutics, CN201 - the list goes on. On paper, it looks smart. Diversify the portfolio, reduce the Keytruda dependency.

But Wall Street's not impressed, especially after Merck slashed its 2024 profit outlook by $1.05 per share to pay for this shopping spree.

Now, you might be wondering if Merck's lost its marbles with all this spending. Is Merck just throwing money around like a drunken sailor, or is this the kind of long-term thinking that separates the biotech wheat from the chaff? Only time will tell, but I've got a hunch these moves might pay off down the road.

Speaking of long-term thinking, Merck's not just acquiring companies left and right. They're also working on extending Keytruda's reign with a subcutaneous version that could push its patent protection into the late 2030s.

But they know better than to put all their eggs in one basket, even if it's a golden one.

That's where Merck's latest blockbuster deal comes in. They've just inked a $1.9 billion agreement with Mestag Therapeutics, a bold move into the world of inflammatory diseases. It's like Merck's discovered a new chess piece on the biotech board, and they're betting it could be a game-changer.

I know Mestag isn't exactly a household name, but these Cambridge, England-based whiz kids are doing some fascinating work with fibroblasts.

For those of you who forgot their biology lessons, fibroblasts are connective tissue cells that play a bigger role in inflammation and tumors than we once thought.

So why is Merck so excited about these little cellular workhorses?

Well, Merck's betting big that Mestag's Reversing Activated Fibroblast Technology (RAFT) platform could be the next big thing in inflammatory disease treatment. The deal gives Merck the option to license therapies against a "prespecified number of potential targets."

Mestag's got three preclinical programs in the pipeline. The frontrunner is MST-0300, a FAP-LTBR agonist designed to "supercharge" antitumor immunity.

Following close behind is M402, a stromal checkpoint agonist antibody aimed at dampening myeloid-driven biology in inflammatory disease.

Notably, Merck isn't the only big fish swimming in Mestag's pond. Johnson & Johnson's (JNJ) Janssen unit also signed its own two-target collaboration back in 2021.

With all these moves, you might be wondering if Merck's still a safe bet or if it's gone off the deep end.

Look, Merck's got more challenges than a one-armed juggler at the moment. But here's the thing: its current stock price is sitting at a level that's bounced back before.

With a solid 2.8% dividend yield that's been growing for 13 straight years, Merck might just be the kind of steady Eddie that value investors dream about.

Sure, there are risks. Keytruda's dominance is both a blessing and a curse. Also, those pricey acquisitions need to pay off. And who knows what Medicare will do next on drug pricing.

But if you've got the stomach for some short-term turbulence, Merck could be poised for a comeback. It's got a strong foundation, a pipeline full of potential, and enough cash to weather the storm. I suggest you buy the dip.

October 10, 2024

Jacque's Post

WHERE TO ADD WEIGHT IN THE STOCKMARKET – SPECIAL ISSUE

OCTOBER 10, 2024

Hello everyone

I’m often asked where I should be adding weight in my stock portfolio.

In August, when we had that meltdown due to Bank of Japan raising rates, I suggested adding weight to Nvidia (NVDA) and Amazon (AMZN). Congrats to those that took the advice.

I put this list together yesterday, so you could position yourself well before the stock run into year end.

This is a Special Issue as I usually don’t publish on a Thursday.

Here’s what I think -

Once we get the U.S. election out of the road, the stock market can push all the uncertainty to one side.

(Even the conflict in the Middle East is not deterring the market thus far).

From that position, the market should become less volatile and power ahead on all cylinders.

Here’s what I suggest –

Add weight to all interest rate plays, as there should be more rate cuts in the short to medium term.

Additionally, add weight to those sectors/stocks that are China related. It is more than likely that China will continue to stimulate its economy. Xi- Jinping is very anti-capitalist, which has kept the economy, and the Chinese market subdued and stale, to say the least.

Emerging Markets – a play on falling interest rates

(EEM) iShares MSCI Emerging Markets ETF

Banks

(GS) Goldman Sachs

(JPM) JPMorgan

(If you don’t own any banks, either of these stocks is a great buy)

In a falling interest rate economy, which is good for business, there will be a rising demand for loans.

Utilities

(DUK) Duke Energy

(NEE)NextEra Energy

(VST) Vistra Energy Corp.

(XLU) Utilities Select Sector SPDR Fund

The AI revolution will need support from energy infrastructure, so utilities will be a growth sector going forward.

Home Builders

(DHI) DR Horton

(LEN) Lennar

(PHM) Pulte Group

(TOL) Toll Brothers

As interest rate cuts are very likely to continue, and costs subsequently decline, home builders should do well.

(If you don’t own any home builder stocks, I would be looking at DR Horton and Lennar)

Energy

(OXY) Occidental Petroleum

(XOM) Exxon Mobil

(PSX) Phillips 66

(CVX) Chevron

Energy is a hedge against inflation as oil & gas prices rise during inflationary periods. Energy stocks are a great way to play rising oil prices.

Consumer Discretionary

(NFLX) Netflix

Profitable streaming service – best in its class

Q3 earnings = October 17

Several analysts, including JP Morgan, believe Netflix can grow revenue in the mid-teens in 2024 & 2025 and low double digits in 2026. Additionally, it could further expand margins and drive multi-year free cash flow growth.

Catalysts = revenue growth from advertising.

Subscriber growth from a paid sharing initiative.

Commodities – China Play

As China is expected to continue to stimulate its economy, (FCX) and (CAT) should continue to see growth. (FCX) is a big play on copper. (But it is uncertain whether the China move has longevity).

(FCX) Freeport McMcMoRan

(CAT) Caterpillar

Healthcare

(XLV) Health Care Select Sector SPDR Fund

Assets over $40.95 billion. The Health Care Select Sector Index includes companies from the following industries: pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.

Annual operating expenses for this ETF are 0.09% making it one of the least expensive products in the space.

12-month trailing dividend yield of 1.51%.

This year (XLE) has gained 7.03% and was up about 17.36% in the last one year (as of 03/25/2024).

Holdings: the ETF has heaviest allocation in the Healthcare Sector - about 100% of the portfolio.

Individual Holdings: UnitedHealth Group Inc. (UNH) accounts for about 9.85% of total assets, followed by Eli Lilly (LLY) and Johnson & Johnson (JNJ).

Top 10 holdings account for about 53.88% of total assets under management.

(I have already recommended Johnson & Johnson Another individual stock I would recommend would be Eli Lilly for the long term).

Precious Metals

(GLD) SPDR Gold Shares

(GOLD) Barrick Gold

(SLV) iShares Silver Trust

(WPM) Wheaton Precious Metal

I have been encouraging everyone to buy gold and silver stocks since last year. If you don’t own any of the stocks listed here, start scaling in now. Gold has pulled back, so it is a great time to add weight or scale in. If you own the above, add weight to any or all by scaling. Gold and silver are in a long-term bull trend.

The metals are seen as a safe haven/ insurance against market volatility and geopolitical conflicts. Additionally, falling interest rates will see gold prices rise. Gold is a hedge against inflation.

I introduced the notion of digital gold in the zoom monthly meeting on Sunday afternoon, October 6. Digital gold is like a token – a form of electronic money – that can be exchanged for physical gold. I will do a whole Post about digital gold soon.

Technology

(AMZN) Amazon

In August when the Bank of Japan raised interest rates and the market dropped, I suggested adding weight to both Nvidia and Amazon. I suggest scaling in and adding weight here too.

Amazon’s revenue growth grew by 540% in the last decade, with net income rising to $30-$42 billion in 2023 and projections over the next five years at 4.5x.

Some of the stocks listed above I have already recommended. If you have any of them, you could consider adding weight.

If you don’t own any stocks in a particular sector, I would suggest adding one stock suggested in that sector.

When I say add weight or buy a stock, I mean to scale in. Do not add all your weight at one buy entry. Spread out your entries over a fortnight or a month or so.

Any portfolio should be well diversified. You should have a cash element and some fixed income. You could look at (HYG) and/or (JNK), which are bond ETFs that now offer a good entry point.

Cheers

Jacquie

October 10, 2024

Diary, Newsletter, Summary

Global Market Comments
October 10, 2024
Fiat Lux

Featured Trade:

(PROSHARES ULTRA SILVER ETF LEAPS),
(AGQ)

Proshares Ultra Silver ETF Leaps

Diary, Newsletter

Trade Alert - (AGQ) – BUY

BUY the ProShares Ultra Silver January 2026 $49-$50 out-of-the-money vertical Bull Call spread LEAPS at $0.30 or best

Opening Trade

10-10-2024

expiration date: January 16, 2026

Number of Contracts = 1 contract

There are a few times in your life when bold action and extreme leverage are called for. This is one of those times.

Having 6,000 paid subscribers does have its benefits.

It gives me 6,000 reliable information sources in all 50 states and 135 countries. I pick up a lot of pretty interesting information from this network. It’s like having the “Baker Street Irregulars” on call that Sherlock Holmes frequently relied on.

So today, I learned from one of the largest car importers in the United States that the East and Gulf Coast port strike would knock 0.5% of GDP growth in Q3. Everything from bananas to car parts is trapped at sea.

A few minutes later, I received a call from an analyst in the Southeast US informing me that Hurricane Helene would knock a full 1.0% off of growth.

Add these two events together, and the Fed will read these as a recession that will crush inflation and accelerate the need for interest rate cuts. There is only one possible response to these developments.

You need to run out and buy as much gold (GLD) and silver (SLV) RIGHT NOW!

In addition, the blockbuster Chinese stimulus package will lead to greater savings, and there is only one place people in the Middle Kingdom can save right now, and that is through buying gold.

I am therefore buying the ProShares Ultra Silver (AGQ) January 2026 $49-$50 out-of-the-money vertical Bull Call spread LEAPS at $0.30 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

If you don’t do options, buy the stock. My target for (AGQ) in 2025 is $85, up 99%.

This is a bet that ProShares Ultra Silver (AGQ) will not fall below $50.00 by the January 16, 2026 option expiration in 15 months.

To learn more about the company, please click here to visit their website.

Don’t pay more than $0.45 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 ProShares Ultra Silver (AGQ) January 2026 $49-$50 out-of-the-money vertical Bull Call spread LEAPS are showing a bid/offer spread of $0.20-$0.40. Divide your money into five pieces and enter a good-until-cancelled orders for one contract at $0.30, another for $0.32, another for $0.34, another for $0.36, and a final one at $0.38.

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, and you have a long position simultaneously offset by a short one.

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 a 16.93% rise in (AGQ) shares, or an 8.47% rise in silver (SLV) over 15 months will generate a 233% profit with this position, such is the wonder of LEAPS. That gives you an implied leverage of 27.51:1 across the $49-$50 space. LEAPS stands for Long-Term Equity Anticipation Securities.

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 (AGQ) $49.00 calls at………….………$12.00

Sell short 1 January 2026 (SLB) $50.00 calls at….,………$11.70

Net Cost:………………………….………..………….….................$0.30

Potential Profit: $1.00 - $0.30 = $0.70

(1 X 100 X $0.70) = $70 or 233% in 15 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.