Bitcoin is sometimes referred to as “digital gold,” but investors should also have some of the real stuff. As J.P. Morgan put it, “Gold is money. Everything else is credit.” So today, with gold prices on the rise, we add exposure to the yellow metal in the form of a low-risk streaming and royalty company.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

The rich get richer. Now, you can too.

Growing businesses with big ambitions need large amounts of money to grow and expand to the next level. But these enterprises can’t get the necessary capital from stodgy and risk-averse bankers. And they are still too small to access the capital markets by issuing stock or bonds. Thus, they are forced into the domain of wealthy individuals and institutions that have money and are itching to reap high returns.

These venture capitalists provide desperately needed money to up-and-coming businesses that can’t get it anywhere else. Thus, they are in a position to negotiate very favorable terms for themselves.

As financial markets have grown in sophistication, venture capital investing is no longer the exclusive domain of the wealthy. There is a little-known class of security that enables regular investors to mimic the very same moneymaking strategies employed by the rich and famous. These securities are called Business Development Companies (BDCs).

In this issue, I highlight one of the most successful BDCs on the market. It pays dividends every single month, has a long and consistent track of raising payouts, and has delivered fantastic total returns.

Good gracious, last week was volatile for the market as the indexes moved violently day-to-day. Yet, by the close of trading on Friday the S&P 500 and Dow were only down marginally on the week, while the Nasdaq had declined by 1.5%.

Starting a month ago, we began to see some leaders chop around, then we saw more short-term froth appear followed by Nvidia’s monstrous reversal last Friday. We’re not making any grand declarations here, but overall, most of the “extended” leaders are being tested, with more than a few wobbling and zeroing in on intermediate-term support and a few already cracking. Now, with that said, most of the other evidence remains fine, whether it’s for the overall market or for “fresher” leadership names, which continue to act well. We’re leaving our Market Monitor at a level 7, but how things play out over the next few sessions will be key.

This week’s list mostly lives outside the tech arena, with many names that have recently taken off and some that are pulling into areas of support. Our Top Pick is blasted off in late January, enjoyed a big run and is now shaking out normally.

Stocks finally had a down week, though the damage was modest. Is it the start of a longer retreat, or a rare speed bump in a relentless bull market? This week could tell us a lot, especially with more inflation data set to print. To better fortify our portfolio against any potential turbulence, today we add an industrial stock that’s a strong value play that is a new addition from Bruce Kaser to his Cabot Value Investor portfolio.

We locked in 5.7% in BITO and 7.8% in GDX last week bringing our total return to 159.2%.

Our GDX position was “called away,” so I plan to start the income cycle over again in GDX by selling some puts early this week.

I plan to add at least one more stock to the portfolio this week, especially if we see the market pullback, which will bring our total to seven stocks. Moreover, I intend to continue to ladder our positions in perpetuity, so we are collecting premium on a weekly basis. As it stands, we have positions due to expire over the next four consecutive weeks.

Earnings season is mostly behind us, but there are a few stragglers yet to report on the calendar. Oracle is on the agenda this week. With an IV rank of 99.9 it makes sense to look at a potential trading opportunity in the company, which I’ve done in the trade ideas below.

The company is due to report after the closing bell today, so if we decide to place a trade look for an alert around mid-day today.

My message remains the same.

I plan on ramping up the positions in our actively managed portfolios (Buffett and Growth/Value) over the next expiration cycle. My goal is to have a minimum of 5 positions per portfolio, but I’m not going to race to get there. I’ll continue to pounce when the opportunity presents itself. We’ve taken our time adding positions since initiating our portfolio and, so far, our patience has served us well.

The S&P 500 (SPY) is up 8.3% YTD and 25.1% since its near-term low back on October 27, 2023. It can’t be argued that we are witnessing something well outside of normal distribution.


If we go back to October 27 and take a quick look at the probability of the current move, we can clearly see that the probability at the time for SPY climbing above 510 (SPY currently sits at 511.72) was 0.93%. That’s right – 0.93%! So yes, again, this is definitely a move well outside of the norm.

The market remains in a solid uptrend, though there’s no question some sellers are beginning to step up, with more volatility in the Nasdaq seen in the past month and, outside of chip stocks, some churning in the leading stocks. That’s not bearish, per se, as we’re still riding our winners, but for new buying we’re being more selective and looking for fresher leaders that have recently emerged with some power. In the Model Portfolio, we sold one stock in the past two weeks while starting a half-sized stake in one of those fresher leaders, and tonight, we’re averaging up in that name and starting another new position, too.

Half of all people need cataract surgery. But even though messing with your eyes is a massive decision, the Big 3 MedTech players in this market don’t have the best solution out there.

This is where today’s company comes in. It has developed cutting-edge technology that drives better outcomes for patients needing cataract surgery. The key? Its lens can be customized once in the eye!

All the details are inside the March Issue of Cabot Small-Cap Confidential.

Cabot Options Institute Income Trader is focused exclusively on the creating consistent income through a variety of options selling strategies. Whether you have questions about selling puts, covered strangles, jade lizards or our income wheel approach, Andy is more than happy to help you steepen your learning curve in this live event.

Although the market is up over 7% this year, it has been moving sideways for the last six weeks. It can’t seem to decide whether it will go higher or lower. But it will have to choose eventually, and probably soon.


The resilience has been impressive. Despite a plethora of troubling issues and headlines, stocks have been hanging tough near this year’s high. While anything can happen, the next significant move is more likely to be lower than higher at this point.

These days everyone is talking about the U.S. Debt Ceiling and whether it will be raised again.

The U.S. debt ceiling currently stands at $31.4 trillion, and if it isn’t raised, the U.S. could default on its obligations.

U.S. Treasury Secretary Janet Yellen said in January the government could pay its bills through early June without increasing the debt limit.

Goldman Sachs estimates that the Treasury could announce an early June debt limit if tax receipts are down 35%. If tax receipts aren’t down quite as much, the deadline could push out into July.

Nearly impossible to ignore in the financial and mainstream media are updates about the ongoing negotiations to avoid a default on its obligations by the U.S. federal government. Accompanying the news is the countdown to the X Date, the unofficial date when the government will run out of authority to make further payments because it will exceed the $31.4 trillion statutory debt ceiling.

The market is up for the year. That’s promising after last year’s debacle. But stocks have been going sideways since the beginning of April and can’t seem to decide on the next decisive direction.


On the one hand, the market has shown inspiring resilience amid the troubling headlines. On the other hand, there is a strong chance that the next significant move is lower after stocks have rallied 20% from the October low.

This week’s note includes our comments on Goodyear Tire (GT), Warner Bros Discovery (WBD) and Berkshire Hathaway (BRK/B), which reported late last week. It also includes comments on the 12 companies that reported earnings this week: Bayer AG (BAYRY), Brookfield Reinsurance Ltd (BNRE), Dril-Quip (DRQ), Elanco Animal Health (ELAN), Goodyear Tire & Rubber Company (GT), TreeHouse Foods (THS), Six Flags Entertainment (SIX), Viatris (VTRS), Toshiba (TOSYY), Volkswagen AG (VWAGY), Warner Bros Discovery (WBD) and Western Digital (WDC).

WHAT TO DO NOW: It remains a mixed environment, with a few mega-cap names doing well but most of the broad market under pressure—and for potential leaders, there remain a good number acting OK but the repeated air pockets make it challenging to make progress. After this week’s sale of Axon (AXON), our cash position is a bit over two-thirds of the Model Portfolio; we could add a couple of small positions if names on our expanding watch list remain intact—but tonight, we’ll stand pat to see if more strength can develop.

Our portfolio companies wrapped up their reporting season this week, which means I have a chance to come up for air after an intense couple of weeks.

Somewhat as expected we had some nice winners, but also some losers too. It’s just that kind of market; and while I wish we could have had 100% of our stocks post terrific performance after reporting, that’s just not realistic.

Consumer prices in April showed inflation pressures remain high but backed off a bit. The consumer price index came in at 4.9%, slightly less than the 5% from March. Not a big deal but a step in the right direction as the below graph highlights.

Electric vehicle (EV) prices and profits are also going down for the most part. Tesla reported $2.5 billion of profits in the first quarter, down from $3.7 billion in the last three months of last year, and $3.3 billion in the first quarter of 2022.

Cannabis stocks rose sharply in early May on news that Congress is getting serious again about allowing banks to serve cannabis companies. The Senate banking committee will hold hearings on the favorable bank reform May 11.

The reform bill, called the Secure and Fair Enforcement (SAFE) Banking Act, was recently refiled by a bipartisan group of lawmakers in both branches of Congress. The co-sponsors were: Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT), and Reps. David Joyce (R-OH) and Earl Blumenauer (D-OR).

Today we are moving shares of Dow (DOW) from Buy to Sell. As the shares have reached our 60 price target, and with no compelling reason to raise that target, we are moving the shares from Buy to Sell. This change will also be made in the Cabot Turnaround Letter.

Moving Kraft Heinz (KHC) to Sell

I will be exiting the Starbucks (SBUX) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET today, February 3.

The FOMC met this week, and the meeting wrapped up with a 25bps hike, as expected. A subtle hint of what was to come (easy to point out in hindsight) was that the FOMC’s statement removed the reference to inflation being elevated due to supply and demand imbalances relating to the pandemic.

As discussed in our weekly issue, and on our weekly call, I will be taking a position in Starbucks (SBUX) today. SBUX is due to announce earnings after the closing bell today (February 2). The stock is currently trading for 110.83.

SPY continues to rally and has now pushed through our short 415 call strike. As a result, I am going to take off the trade. I will be following up this trade with a few opening trades as we need to start looking towards March expiration for premium-selling opportunities.

Well, I think we all knew the time would eventually come. We are going to close out of our February IWM iron condor as it has reached our stop-loss. This marks our first loss since August 11 and only our second since initiating the Quant Trader service back in early June. If you wish to hold, please be aware of the risks. Remember, trading is a marathon, not a sprint.

We need to bring our deltas back in line as both SPY and VNQ have pushed in-the-money and closer to parity with their respective LEAPS.

We currently own the AAPL January 19, 2024, 130 call LEAPS contract at $54.20. You must own LEAPS in order to use this strategy.

Following up on Catalyst Pharmaceuticals (CPRX) here. This week the company closed the purchase of the U.S. rights to FYCOMPA from Eisai. This is an epilepsy drug that will add revenue and earnings in the current year. FYCOMPA sales in 2022 should be about $136 million.

I will be exiting the Visa (V) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET today, January 27.

Chevron continues to push higher since we added the position back on January 9. The ongoing advance has pushed our deltas to an almost neutral state. As a result, I want to buy back our calls and immediately sell more premium.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.