In Today’s Issue:

• Trade deal with the EU?

• Trade deal with China?

• Will Trump fire Powell?

• Gold, Bitcoin, and little else

• The fallacy of fixed allocations

• Hedging strategies ranked by GPT

• and more……..

Announcements

Our Next Webinar

Trump’s Plan For the Economy and How It Impacts Your Investments

Thursday April 24, 2-3pm EST

Register

In honor of gold and bitcoin being the only areas doing well figured I would highlight the BEGS bell ringing if you are going to be in Chicago….

News & Noise

🧠 News:

❌ Noise:

Uh, no….

What Wall Street Is Saying

David Boole, BayCrest…

Jonathan Krinsky, BTIG….

Gold, Bitcoin, and Little Else

Not a lot going on in the market on Thursday. Could be an undercut and rally at the 10 day, but could also be a bear flag….

Still think the odds aren’t in your favor to be a bull here (more on that below). A Trump tweet could ramp the market 10% or more, but every small rip is being sold into. I still believe we have seen the lows though (not married to that view by any means).

Precious metals pulled back on Thursday, which is not odd given the strength of the rally. GLD is still extended….

Same with the miners….

Silver (SLV) is a bit more interesting and could be buyable on an undercut and rally at the 20 day EMA, and perhaps the 50 day…..

Bitcoin maybe the most interesting chart here. It has held up reasonably well and you have undercut and rally patterns all over the place. Only negative is that it’s below it’s 200 day….

MSTR is a levered way to play…..

What do you do from here? I think it comes down to where you are:

1. You rode the market down fully invested or close to it—-Probably sit tight, as I said above I think the lows are in and there is nothing worse than taking the entire downside and missing the move back up. You could add some hedges, especially on up days. Outright SPY puts, VIX calls, ARKK puts, etc. Or more advanced strategies if you know how to do them.

2. You missed most or all of the decline. Be careful here, not much worse than winning the battle and then losing the war. You were smart up until now, don’t make a mistake. Wait for better odds (see below).

The Fallacy of Fixed Allocations

I often compare investing to playing cards. With games like Blackjack and Poker the key to success if betting more when the odds are in your favor and betting less, or folding when they aren’t. In Blackjack if you have a 10 and the dealer has a 6 you double down. You won’t always win that bet, but the odds of winning are in your favor. On the other hand, if you have a 15 and the dealer has a 10 the odds are against you. In Poker if you have a 3 and 6 unsuited against kings and aces then you fold. If you have pocket aces then you bet aggressively.

Traditional asset allocation is all about taking risk according to your age, regardless of the market environment. If you are 75 then you shouldn’t try to make a lot of money in 2003, 2009, 2023, etc. If you are 25 then losing a lot from 2000-2, 2008, and 2022 is fine. Now, I’m not saying that your situation doesn’t matter. I’m 56 and have plenty of money, a 50% gain won’t change my life, but a 50% drawdown would. The amount of risk I’m going to take is going to be less than someone younger who is building up their assets. What I am saying is that ignoring the market environment in deciding how much risk to take is stupid.

Figuring our the risk in cards is pretty simple, markets are not as straight forward, but it does give you clues. To start this year anything AI or AI related was going crazy. It was obviously a bubble, but bubbles can last a while. DeepSeek should have been your first warning to de-risk. Not because what was being said about it was true, it probably wasn’t, but that was the potential pin for the bubble as it got investors asking uncomfortable questions about capex and monetization. Then Trump and Bessent both warned you about the markets. This was your cue to cut risk.

If you are going to cut risk, how do you do it? The traditional answer is bonds, I am going to give you an alternative. The industry touts things like the 60/40 portfolio, which says that no matter the situation you should always be 60% stocks and 40% bonds. The first issue here is what bonds? The recent selloff and 2022 have shown the problem of using long duration bonds, which sold off when the market sold off. If you use short duration bonds, then yes, you reduce your risk, you also substantially reduce your potential returns. I would argue the trade off is not worth it as the market goes up most of the time.

Here’s a different approach. First you need to understand two statistics, Delta and Beta. Here are definitions from Chat GPT….

📈 Quick Definitions: Delta vs. Beta

Δ Delta (Options Greek):

Delta measures how much an option’s price is expected to move for every $1 move in the underlying asset.

• A call option with a delta of 0.60 means it gains $0.60 for every $1 the stock goes up.

• A put option with a delta of –0.40 means it gains $0.40 when the stock drops $1.

• Delta also gives you a probability estimate: a delta of 0.25 implies a 25% chance the option finishes in the money.

👉 Why it matters: Delta helps you size risk and gauge how directional your option trade really is.

β Beta (Stock Volatility Metric):

Beta measures how volatile a stock is relative to the overall market.

• A beta of 1.0 = moves in line with the S&P 500.

• >1.0 = more volatile (amplifies market moves)

• <1.0 = more stable (moves less than the market)

• Negative beta = moves opposite the market (rare)

👉 Why it matters: Beta is useful for portfolio construction. It tells you how a stock might behave in a broad selloff or rally—and helps balance exposure.

Let’s say I have $100,000 and it’s all in the S&P 500 (SPY). SPY has a delta of 1, meaning a 1% down move in the market equates to a 1% down move in SPY. So if the market goes down 1% you will now have $99,000. Now let’s say you are seeing signs that the risk of the market is rising. You take $3,000 and buy a May 46 put on the ARK Innovation ETF (ARKK). This put gives you the ability to sell ARKK at 46 (currently $45.12). ARKK has a 1.757 Beta to the S&P according to Bloomberg, so if the S&P is down 1% ARKK should be down 1.757%. This option has a -.5195 Delta, meaning that a $1 down move in ARKK would equate to a gain in the option of $.5195. Now let’s do the math…..

1. You now have $97,000 in SPY, if it goes down 1% you have $96,030

2. $3,000 would have bought you 9.52 put contracts on ARKK at a cost of $3.15 (you can’t buy fractional contracts this is just an example)

3. A 1% down move in the S&P is a 1.757% down move in ARKK, meaning the new price is $44.33.

4. At a -.5195 Delta your option would have grown to $3.56 and the total in the option would be $3392.22

5. Your total portfolio would be worth $99,422.23, for a loss of -.58%

So in this example you have cut your downside almost in half. On the flipside, if the market continues to go up then you give up 3% of your upside assuming your puts expire worthless (why we use the puts instead of shorting ARKK outright).

This is a very simplistic example but it gives you an idea of other ways to manage risk that don’t give up as much of your long term upside, and don’t have the same uncertainty of adding long duration bonds to your portfolio. Once you understand the math you can adjust this any way you want. You could cover more than half your down side in this example, or spend less on the option and cover less downside.

In my webinar this week I will go into how to use charts to figure high potential areas to add puts on ARKK. To register Click Here. 

I used Chat GPT to rate the ARKK hedge against 60/40 and suggest potential improvements….

🧠 Deep Dive: Hedging Strategies – ARKK Puts vs. 60/40 vs. Alternatives

“If the odds are against you, fold. If they’re in your favor, double down.” — Matt Tuttle

🎯 The Setup You Proposed: Hedging SPY with Puts on ARKK

✅ Strategy Summary:

• $100K portfolio fully in SPY

• $3K allocated to ARKK puts (deep out-of-the-money)

• ARKK beta = 1.757 vs SPY

• Option delta = –0.5195

• Outcome: If SPY drops 1%, portfolio only drops ~0.58%

• Upside cost: 3% drag if puts expire worthless

🧪 RATING: 8.5 / 10

👍 What Works:

• Highly asymmetrical: defined risk, scalable protection

• Precise hedging math: you’re not just winging exposure, you’re sizing for impact

• Smart use of beta: targeting an overreactor (ARKK) lets you hedge with fewer dollars

• Better than shorting: limited loss + lower margin/cost/risk

👎 Where It Can Improve:

1. Timing Risk: Buying puts always comes with decay—if SPY grinds sideways or ARKK volatility compresses, you lose premium.

2. Liquidity/Execution: Deep OTM ARKK puts can have wider spreads, especially on size.

3. Market Gap Risk: One-day moves can exceed modeled deltas; your hedge might lag in a crash scenario.

4. Beta Instability: ARKK’s beta can change rapidly depending on market phase (e.g., AI bubble vs. liquidity unwind).

🔧 Ways to Improve the ARKK Put Strategy:

1. Use Options on Multiple High-Beta Correlates

• Combine ARKK with puts on SMH, TSLA, or QQQ to diversify hedge exposure across correlated “froth” zones.

2. Staggered Maturities

• Layering different expiration dates (e.g., May + July) gives you a hedge that persists if timing is off.

3. Dynamic Sizing Based on Volatility

• When implied vol is low, buy more puts.

• When vol spikes, trim puts or switch to VIX calls.

4. Sell Puts When VIX is High

• If ARKK tanks and vol spikes, sell shorter-dated puts to harvest theta and reduce net cost.

⚰️ The 60/40 Portfolio — Rating: 3 / 10

🚨 Recent Failures:

• 2022 & 2025: Equities AND bonds fell together. Long-duration Treasuries did not act as a hedge.

• Correlation Breakdown: Inflation + Fed hawkishness erased bond diversification benefit.

• Poor asymmetry: You give up 40% of potential equity upside in exchange for a bond hedge that failed.

🔻 Risk/Reward Flaws:

• Bonds = capped upside + downside in rising yield regimes.

• Equities = volatile, but still preferred long-term vehicle.

• Combined? It’s a strategy from a bygone era of deflation and dovish central banks.

🧰 Alternative Hedging Strategies — Ratings and Brief Analysis:

🧭 Final Recommendation for The H.E.A.T. Formula Audience:

If your goal is:

• Defined downside protection

• Flexible exposure

• Preservation of upside potential

Then using puts on high-beta correlated assets like ARKK is one of the best asymmetric hedging tools available—especially in a tactical macro environment where 60/40 has repeatedly failed.

Stick with this. Just refine the edges.

Before you go: Here are ways I can help

‍

1. ETFs: We offer innovative ETFs that cover all aspects of The H.E.A.T. Formula, Hedges, Edges, and Themes.

2. Consulting: I'm happy to jump on the phone with financial advisors at no charge. I've built a wealth management firm and helped other advisors grow their practices through the use of substantially differentiated investment strategies. If you want to talk just send me an email at [email protected]

3. Monthly investing webinars

4. Rebel Finance Podcast https://www.youtube.com/@TuttleCap

5. Wealth Management-Coming Soon

6. Paid Newsletter Service-Coming Soon

   The views and opinions expressed herein are those of the Chief Executive Officer and Portfolio Manager for Tuttle Capital Management (TCM) and are subject to change without notice. The data and information provided is derived from sources deemed to be reliable but we cannot guarantee its accuracy. Investing in securities is subject to risk including the possible loss of principal. Trade notifications are for informational purposes only. TCM offers fully transparent ETFs and provides trade information for all actively managed ETFs. TCM's statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. Trade notification files are not provided until full trade execution at the end of a trading day. The time stamp of the email is the time of file upload and not necessarily the exact time of the trades. TCM is not a commodity trading advisor and content provided regarding commodity interests is for informational purposes only and should not be construed as a recommendation. Investment recommendations for any securities or product may be made only after a comprehensive suitability review of the investor’s financial situation.© 2025 Tuttle Capital Management, LLC (TCM). TCM is a SEC-Registered Investment Adviser. All rights reserved.