I’ve been a trader and investor for 44 years. I left Wall Street long ago—-once I understood that their obsolete advice is designed to profit them, not you.
Today, my firm manages around $5 billion in ETFs, and I don’t answer to anybody. I tell the truth because trying to fool investors doesn’t help them, or me.
In Daily H.E.A.T. , I show you how to Hedge against disaster, find your Edge, exploit Asymmetric opportunities, and ride major Themes before Wall Street catches on.
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Table of Contents
H.E.A.T.
I mostly talk about the T in the H.E.A.T. Formula but I like to mix it up from time to time. Today we cover the A. Asymmetry. The idea is that you want your trades and your overall portfolio set up so that if you are right you make a lot, and if you are wrong you lost a little. Market’s started to show some cracks again last week. Is the top finally here, or is this a needed pause in a continued bull market? What if there was an investment strategy that worked in either scenario? There just might be……
How to Stay Bullish Without Getting Burned: The Ratio Spread Play for a Wobbly Market
Markets are finally starting to wobble. After months of AI-fueled momentum, last week’s sharp reversals reminded investors that even bull markets can buckle under their own weight. Index breadth is narrowing, volatility beneath the surface is exploding, and the Fed’s “December cut” suddenly looks less certain. But here’s the problem: if you sell everything and go to cash, you risk missing the next leg higher—especially when liquidity, AI CapEx, and earnings momentum are still driving upside.
For traders who want to stay long without chasing, one of the smartest tools right now is the ratio call spread, sometimes called a “limited-cost lottery ticket” on upside. It’s a structure that lets you participate if the market rebounds, while reducing exposure if the next leg down gets ugly. I added a bunch of ratio spreads near the bottom on Friday. My thinking was this could be a top, but I didn’t think so. However, I wanted to be protected if I was wrong.
The Setup: How It Works
The ratio spread is a directional options strategy that plays both offense and defense. You buy one call closer to the money, sell one (or slightly more) at a higher strike to offset the cost, and occasionally add a small “kicker” further out-of-the-money to reintroduce upside potential. It’s not just a hedge—it’s a way to position for controlled participation.
Here’s an example using Palantir (PLTR). Note I am not recommending you do this trade, or buy PLTR. It’s a good example as it’s a volatile stock that got crushed last week. It’s also likely to move one direction or the other, which is the key to this trade as you will see :
PLTR trades at $177.93
Sell 10 of the 175 calls for $9.30
Buy 10 of the 180 calls for $6.67
Buy 6 of the 185 calls for $4.67
Net cost: roughly flat (–$172 total)
That means you’re essentially long upside for free, but with well-defined risk.
Why It Works in a Fragile Market
1️⃣ Cheap Exposure, Built-In Protection
You’re taking a modest bullish stance for little to no cost. If PLTR (or the market proxy you choose) falls or stagnates, you lose next to nothing. That’s a gift when implied volatility is high, and investors are paying up for insurance.
2️⃣ Profit from a Sharp Rebound
If the market spikes, your long calls kick in. You get levered exposure above roughly $195—precisely the kind of fast move you want exposure to in an environment where AI names and rate-sensitive tech can gap up on a single headline.
3️⃣ A Cushion if Things Break
The real beauty of this structure is its asymmetry. If the market spirals down, your maximum loss is defined and small. You’ve capped your premium outlay while keeping convexity (the right to be wrong small and right big).
4️⃣ Behavioral Edge
The strategy forces discipline. You can’t get shaken out by noise, because your cost is near zero and your loss limited. It’s a position built for a market where sentiment shifts daily.
The Catch (and How to Manage It)
The risk zone is when the stock grinds higher but doesn’t accelerate—for example, between $180 and $185 in the PLTR setup. In that band, your short calls lose more than your longs gain. But if the move is decisive, your extra long calls take over and flip the position back to profit.
You’re betting on volatility in direction, not quiet drift. The key is to size small and time well—use this structure when implied vol is elevated and directional conviction is high.
If the market looks like it’s bottoming after a selloff, this strategy is perfect: low cost, convex upside, limited downside. If markets roll over again, you walk away with minimal damage.
🧩 Payoff Breakdown
Let’s look at different regions of stock price at expiration (11/21/25):
1️⃣ Below 175 (All Calls Expire Worthless)
All options expire OTM.
You lose the small $172 debit.
✅ Max loss ≈ $172.
2️⃣ Between 175 and 180
The 175 short calls start gaining intrinsic value (you owe money).
The 180 and 185 calls are still OTM.
P/L declines linearly as PLTR rises toward 180.
At 180:
Short 175C: –$5 × 10 = –$5,000
Long 180C: 0
Long 185C: 0
Net ≈ –$5,000 – $172 = –$5,172 loss.
⚠️ This is your worst zone — you’re short delta with no offset until 180.
3️⃣ Between 180 and 185
Now the 180 calls you own kick in and offset the 175 shorts.
At 182.5:
Short 175C: –$7.5 × 10 = –$7,500
Long 180C: +$2.5 × 10 = +$2,500
Long 185C: 0
Net ≈ –$5,000 – small debit = ~–$5,200
At 185:
Short 175C: –$10 × 10 = –$10,000
Long 180C: +$5 × 10 = +$5,000
Long 185C: 0
Net ≈ –$5,000 – $172 = ~–$5,172 loss.
So your max loss region is between ~175–185, around –$5,200.
4️⃣ Above 185 (All Longs In-The-Money)
Once the 185s kick in, your P/L begins to improve again because you have extra long exposure.
At 190:
Short 175C: –$15 × 10 = –$15,000
Long 180C: +$10 × 10 = +$10,000
Long 185C: +$5 × 6 = +$3,000
Net: –$2,000 – $172 = –$2,172 loss
At 195:
Short 175C: –$20 × 10 = –$20,000
Long 180C: +$15 × 10 = +$15,000
Long 185C: +$10 × 6 = +$6,000
Net: +$1,000 – $172 = +$828 profit
At 200:
Short 175C: –$25 × 10 = –$25,000
Long 180C: +$20 × 10 = +$20,000
Long 185C: +$15 × 6 = +$9,000
Net: +$4,000 – $172 = +$3,828 profit
For every $1 above 195, you gain roughly +600 delta (6 extra long calls) — so upside is open-ended beyond breakeven.
🧮 Key Metrics
Metric | Approx Value |
|---|---|
Max Loss | ≈ $5,200 (between 175–185) |
Breakeven (Upper) | ~194.86 (185 + $5,172 ÷ 6 ≈ 194.86) |
Unlimited upside | Above ~195 |
Max Profit | Unlimited |
Max Loss Region | 175–185 |
Net Debit | $172 |
🎯 Trade Summary
✅ Small cost — almost free entry.
✅ Unlimited upside above ~$195.
⚠️ Sharp loss zone if PLTR stalls between 180–185.
✅ Bullish bias, but wants a decisive move (either flat or strong rally).
🧨 Gamma risk: if PLTR grinds to 182 into expiry, you’ll wear a $5k hit.
The Big Picture
In a market that’s split between “AI euphoria” and “macro anxiety,” traditional long calls are expensive and naked longs are risky. The ratio spread gives you a smarter long bias: defined risk, free exposure, and asymmetry in your favor.
If the AI trade reignites, you participate. If the market corrects deeper, you lose pocket change.
In short, you’re renting upside, not buying it—a critical mindset in a market priced for perfection.
Key Takeaway
When volatility rises and confidence fades, don’t abandon bullish positioning—restructure it. The ratio spread is the modern bull’s seatbelt:
✅ Low cost
✅ Limited risk
✅ Explosive potential
It’s how professionals stay long in late-cycle markets—playing offense without taking the kind of risk that ends careers when the tide turns.
Bottom Line:
This is the market for asymmetric bets. The same way AI power grids and data centers are learning to do more with less energy, traders need structures that do more with less capital. The ratio call spread is that structure—it lets you stay in the game, even when the market starts to wobble.
The ratio spread is a tool that should be in your toolbox. Do not do this for your entire portfolio, if the market and your stocks are just up a bit you will have losses. I like it for those highly volatile stocks that you want to keep exposure to but are worried about downside risk.
News vs. Noise: What’s Moving Markets Today
A Tough Week for AI…with Two Quiet “Lines in the Sand”
Last week was the market’s first real reality check for the AI trade in months: the Nasdaq logged its worst week since April as investors questioned whether $400B+ in planned AI capex will translate into profits fast enough. High-expectation names (PLTR, NVDA, ORCL) were punished on any hint of deceleration, while the government shutdown starved the tape of hard data and let sentiment do the steering. And yet, beneath the headlines, two technical “lines in the sand” held: the S&P 500 staged an undercut-and-rally right at its 50-day moving average, and Bitcoin defended the 100k zone after a textbook 20–22% corrective flush. That combination says the bulls haven’t lost the ball—momentum is dented, not dead. If the S&P can build above the 50-DMA and breadth improves, Tuesday’s AI wobble looks more like a reset than a regime change; if it fails, expect a quick trip to the 100-DMA as valuation gets de-froth-ed.
Takeaways for investors:
Respect the levels. The S&P’s undercut & rally at the 50-DMA is your near-term risk toggle: above it, lean into quality AI enablers (power & grid: ETN, PWR, CEG, VST) and cash-generative platforms (GOOGL/AMZN); below it, keep hedges on and fade high-multiple “AI pretenders.”
Bitcoin’s defense of 100k fits prior bull-market playbooks (levered liquidations, RSI oversold, liquidity still positive). Use retests of 100k/ prior lows for scaled entries with tight stops; confirmation is a clean reclaim of 100k → higher highs.
Capex ≠ cash flow (yet). The market is shifting from euphoria to accountability. Own the wires, watts, and wafers that get paid as capacity energizes; demand unit-economics bridges from model owners before chasing.
Plan for both paths. If the S&P holds 50-DMA and BTC stabilizes above 100k, expect a risk-on drift; if not, respect a quick 5–7% index air-pocket as AI leaders re-rate from “perfect” to merely “excellent.”
Bottom line: it was a bruising week for AI narratives, but the tape left two important footholds. As long as the S&P holds its 50-DMA and Bitcoin protects 100k, the benefit of the doubt stays with the uptrend—just with tighter risk and a sharper focus on real cash flows.
A Stock I’m Watching
Today’s stock is Tempus AI (TEM)….
I’ve talked about this name before but it’s been a while. It got crushed last week but held the 200 day moving average. Jensen Huang and Marc Andreessen have both said that the biggest beneficiary of AI will be healthcare. We’ve also covered this a bunch on the podcast . With Nancy Pelosi retiring we won’t be able to get updates on whether she buys more of TEM but like the theme regardless.
How Else I Can Help You Beat Wall Street at Its Own Game
Inside H.E.A.T. is our monthly webinar series, sign up for this month’s webinar below….
Why Covered Call ETFs Suck-And What To Do Instead
Friday November 14, 2-3PM EST |
Covered call ETFs are everywhere — and everyone thinks they’ve found a “safe” way to collect yield in a sideways market. |
The truth? |
They cap your upside, mislead investors with “yield” that’s really your own money coming back, and often trail just owning the stock by a mile. |
Join me for a brutally honest breakdown of how these funds actually work — and what you should be doing instead. |
What You’ll Learn:
🔥 Why “high yield” covered call ETFs are often just returning your own capital |
In Case You Missed It
For some traders, like Matthew Tuttle of Tuttle Capital Management, there have been opportunities to cash in on the administration’s deals even after they are announced. He wrote put options on Intel’s stock in October, betting that the shares would rise as investors followed the US by piling in. He exited the position on Nov. 5 for a profit.
‘Hey, I Was Right’
While Tuttle isn’t trying to guess which specific company will be next in line, he said the trend adds to his conviction about sectors where he has already invested. That includes critical minerals and drones, which he expects to benefit from government support going forward.
The government is “unlikely to buy into any industry or area that I have not already considered, but the fact that they’re doing it means, hey, I was right,” Tuttle said. “Somebody else is doing this too and someone with a whole lot deeper pockets and way broader reach.”
“Digital asset treasury companies are basically leveraged crypto assets, so when crypto falls, they will fall more,” Tuttle said. “Bitcoin has shown that it’s not going anywhere and that you get rewarded for buying the dips.”
The H.E.A.T. (Hedge, Edge, Asymmetry and Theme) Formula is designed to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.
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.