We’ve seen steady moves to the upside across the major indexes lately. And even though it feels like the 24/7 news cycle is on steroids right now between tariffs, earnings, and global tensions… The market keeps shaking it off. That kind of resilience tells me we’re not done climbing – at least, not yet.
Now that doesn’t mean things couldn’t change (and fast). But if that happens, we’ll be pivot just as quickly.
For now, though, the bulls are still firmly in control. And that means you’ve got even more ways to trade than you may realize.
In fact, the hottest questions this week were about tariffs, trades—and whether a long call was still the only reliable strategy in this market.
So, let’s break it all down…
Q: Tom, what impact does the new Japan tariff deal have on the markets?
Glad you brought this up because it’s exactly the kind of headline that can swing momentum fast.
In short, it’s another tailwind. The reduction in tariffs helps support cross-border trade, and both the U.S. and Japan came out of it speaking positively. That kind of tone matters—and the market responded accordingly.
The Nikkei surged over 3.5%, and U.S. markets continued to climb. Both the S&P 500 and Nasdaq tagged new highs this week.
It’s another reason I’m still seeing bullish setups take shape.
Q: Is there a sector you’re favoring because of the Japan deal?
Another great question! There are actually a few that catch my eye:
- Autos: Japanese automakers benefit directly, but U.S. automakers could gain too as regulatory barriers ease. Dealers selling Japanese brands here in the U.S. also stand to win.
- Semiconductors: Japan pledged $550 billion (yes, BILLION) in investments for chip manufacturing and research and development. That could be big for names like INTC and AMD, especially if that funding accelerates development.
- Agriculture & Energy: The American AG Network noted this deal strengthens U.S. grain, meat, and livestock exports—and a big chunk of Japan’s investment is earmarked for energy infrastructure, advanced fuels, and clean-energy tech.
Q: Tom, when I think a stock is heading higher, should I always buy a call… Or are there other bullish strategies you recommend?
This is a question I’ve gotten a lot over my career, and I’ll tell you the same thing I’ve told everyone else…
You’ve got options – literally.
Just like those cooking shows where a chef prepares the same ingredient three different ways… you can do the same thing with a bullish trade idea. The right strategy depends on your conviction, your price target, your time frame—and how much capital you want to commit.
Here are three bullish option strategies I like to use:
1. Long Call
Use it when: You expect a strong move higher
Profit potential: Unlimited above the strike, minus the premium
Risk: Limited to the premium you paid
This is the most straightforward bullish play. Just make sure the potential move justifies the cost of the option—and that the stock has enough juice to get there in time.
2. Call Debit Spread
Use it when: You expect a moderate move higher
How it works:
- Buy to Open one call
- Sell to Open a higher strike call
(Both with the same expiration)
Profit potential: Capped at the difference between the strikes minus the premium paid
Risk: Also limited to your net debit—but usually lower than a long call
This is a great setup when you think the stock will move but not take off like a rocket. It lowers your cost and gives you a more defined risk/reward profile.
3. Call Butterfly Spread
Use it when: You expect the stock to land near a specific price at expiration
How it works:
- Buy 1 lower-strike call
- Sell 2 middle-strike calls
- Buy 1 higher-strike call
(All with the same expiration)
Profit potential: Highest if the stock finishes at the middle strike
Risk: Limited to the premium paid
Butterflies are perfect when you’re targeting a price zone (like heading into earnings or a known event) and you want to capitalize on minimal movement with maximum precision.
Now keep in mind that while these are all bullish strategies—they’re not one-size-fits-all. Knowing when to use which one can make all the difference.
That’s why I always start with two questions:
- Where do I think the stock is going?
- How long do I think it will take to get there?
From there, I match the right strategy to the setup—and tools like Money Calendar help me pinpoint the best price and time targets to trade with confidence.
We’ll dig into this more next week. In the meantime, just remember… bullish doesn’t always mean buying a call. You’ve got options—use the one that works best for your setup.
Cheers,
Tom Gentile
America’s Pattern Trader
