Hi everyone – time for a quick update on this weeks Kyle Dennis Fast5 trade alert that netted subscribers 65% – 100% in profits! This was DESPITE the market being down over 10% almost every day! Kyle Dennis catalyst stocks are red hot and making us bank.
Great win this week on a red Monday for the markets with our JNUG trade in Kyle Dennis Fast5 service. I love to showcase the best trade for the week – especially when we are playing the worst market in recent history!
You can check out the Fast5 Alerts service in this FREE WEBINAR!
That webinar is also a good introduction to Kyle Dennis and his catalyst stock trading strategy. It is worth learning about because he was able to take $15,000 and trade it into $7MM+ in a few short years!
Kyle Dennis catalyst stocks are red hot – they seem to be almost immune to the market conditions. I recently bought a lifetime subscription to Fast5 because it has impressed me so much.
I heard from a lot from other Kyle Dennis Fast5 subscribers who cashed in on this quick call option trade, and I love that so many of us were able to take control of this crazy market with a bullish play on JNUG:
Roughly 3,000 of you stopped by and watch Kyle Dennis’s State of the Market address on Tuesday. It was great chatting with you and hearing about your JNUG wins!
Awesome returns, Fish!
It was just a quick thing the RagingBull stock alerts platform threw together to help explain how Kyle Dennis is pacing for his best year of trading returns ever, even with the market going nuts around us!
But he made sure to include lots of good info we can all put to work in the days and weeks ahead.
Back to $JNUG… if this was your first time trading a triple-leveraged exchange-traded fund (ETF), I’m glad you were able to make it a positive experience!
I didn’t take part in this trade but many did! Huge learning experience for me as well.
It can be a wild ride to trade these suckers if you don’t know what you’re getting into… but for those times when you want to super-leverage a directional move, they’re an awesome, explosive tool to have handy.
And with big directional moves still the order of the day in this market, here’s what you need to know about trading JNUG — or any other triple-leveraged ETF — on your own.
1. They’re Built for Speed and Power…
Double- or triple-leveraged ETFs are designed to offer returns that are multiples of the daily performance of an underlying index or exchange-traded product (ETP). In the case of JNUG, it tracks daily investment returns that are 300% of the MVIS Global Junior Gold Miners Index (MVGDXJTR).
That index can be proxied on a 1:1 basis in the ETF world via the VanEck Vector Junior Gold Miners ETF (GDXJ), which we’ll use for our head-to-head matchup below.
What does that mean on a practical level? Well, on Monday this week, GDXJ gained 20%, while JNUG rallied 83% for the session.
Monday’s big gold rally: GDXJ (blue) vs. JNUG (red).
So if you were looking to profit quickly from a surge in safe-haven gold buying on Monday, the 3X fund was a super-charged way to get that done.
Don’t get me wrong; GDXJ definitely would’ve gotten you there… “there” just might’ve been less dramatic profits than a comparable JNUG play!
2. … Not accuracy
Leveraged funds are designed to provide multiples of the daily return of the underlying, and so they reset at the end of each trading day. That means the head-to-head performance of the leveraged vehicle versus its base index/ETF will deviate from the daily target in unexpected ways over longer time frames.
And guess what? Periods of increased stock market volatility, like the one we’re in now, can exaggerate that effect.
So while the action on Monday this week was pretty much a textbook 300% leveraged return for JNUG compared to GDXJ, as we saw above, check out the 200-day chart below.
GDXJ is down just over 9% for the period, while the 3X leveraged JNUG is down more than 78%.
The takeaway is to skip the buy-and-hold strategies with leveraged ETFs. Instead, reserve these juiced-up funds for day trades, if possible, since overnight holds (and longer) can have surprising results.
3. You Can Go Bearish, Too
JNUG has a bearish counterpart, the Direxion Daily Junior Gold Miners Index Bear 3X Shares (JDST), that’s engineered to return 300% of the inverse of the same basis index.
The same is true of most leveraged ETFs available; there’s generally a bullish and bearish counterpart available. That allows you to bet bearishly on a sector simply by buying shares of the leveraged bear ETF, rather than taking on the risk of shorting shares directly.
However, as I’ve said, you still want to keep time frames tight, and ideally to within one session. Just look what happens when we add JDST to our 200-day comparison chart with GDXJ and JNUG:
Guess what? The 3X bear leveraged JDST is down 69% for the period — almost on pace with the losses realized by its counterpart 3X bull leveraged JNUG.
Like the prospectus says, it’s simply not a solid long-term trade, gang.
4. You Can Limit Risk (and Leverage Leverage!)
with Options
Just like we did with our JNUG calls, you can trade options — either calls or puts — on many leveraged ETFs, as an alternative to buying or shorting the shares directly.
By playing options, your risk on these vehicles is strictly limited to your initial premium paid to enter the position. Given that these leveraged funds are built to deliver outsized intraday percentage returns, limiting your capital at risk is a savvy move.
Plus, the lower price of option premiums relative to the underlying stock means that you’re going to get that much more leverage on your leveraged ETF play. So if you’re looking to capitalize on a high-volatility directional surge, this is about as amped-up as it gets.
For JNUG this week, Kyle bought the March 20 $6 calls for $1.44 each, when JNUG was trading around $5.25. So a single contract controlling 100 shares cost $144 total, compared to $525 to buy 100 shares of the ETF outright.
JNUG was up to $6.90 when Kyle Dennis closed out his calls for 65% gains, so the percentage return on a comparable stock trade over that time frame would’ve been only 31% (and with more than triple the capital at risk).
If you’re new to options and haven’t found your comfort level there yet, don’t sweat it. Jeff Bishop (Kyle’s mentor) wrote a book detailing how he has used options to nail some big winners, like Kyle Dennis’s 100% winner on WORK yesterday.
It’s yours free to download, so check it out if you’re looking to sharpen your trading edge. And if you’ve downloaded the book already and haven’t gotten around to reading it yet… now might be a good time, with every single sporting event cancelled!
Conclusions
Good luck trading this volatile market!
Kyle Dennis catalyst stocks are red hot – they seem to be almost immune to the market conditions. Don’t get left behind! Check out this full Fast Five Alerts Review and see for yourself!
Wesley
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