Dear Student,

Between the market action following the Fed’s historic rate cut and Hurricane Helene making landfall in Florida, it’s been a busy week! If you’re still in the path of this storm (or have already been affected by it), I hope that you and your family are safe.

In case you missed anything, here’s what we covered…

• On Monday, I sent you my Five Points video update, where I warned you about two key economic reports that could test investors reactions to the Fed’s rate cuts. I also explained why we needed to shift our attention to exchange-traded funds (ETFs) this week.

• On Tuesday, I showed you how to take advantage of the seasonal bullishness emerging within the tech sector using my “trade the haystack”

• On Wednesday, I took you on a deep dive into Money Calendar’s seasonal pattern on one of the largest ETFs in tech: The Technology Select Sector SPDR Fund (XLK).

• And yesterday, I walked you through three different ways to trade one of the hottest – if not THE hottest – tech stocks in the world.

Now, due to all the hurricane prepping, I wasn’t able to record a new episode of the Patterns & Profits Podcast like I hoped…

So, before I shut things down for the weekend, let’s take a minute to go through the mailbag…

Q: Hi Tom, it seems like ETFs have become more popular, in general, over the years. Are they better than mutual funds?

A: Great question! ETFs have become more popular in the same way that options have – the more knowledge people have about them, the more aware they become of their benefits and when to use them. I wouldn’t say that ETFs are better or worse than mutual funds because it ultimately depends on your financial goals, timeline, risk tolerance, capital, etc.

But, as a trader, I like ETFs because they offer diversityand spread out the risk. If one stock in the ETF underperforms, others in the basket can help offset it, making the ETF less vulnerable to a big drop in value compared to holding a single stock.Trading an ETF can be just as straightforward as trading shares of stock, but it gives you much broader exposure.

And… You can trade options on certain ETFs – something I personally love to do!

Q: Hi Tom, I read your article on trading the haystack and was curious if there are any other patterns coming that you could use this strategy on? Thanks!

A: Hey, thanks for being a Patterns & Profits reader! It’s good to have you here. The great thing about pattern trading is that there’s ALWAYS one to trade. In fact, I’ve got tradeable Money Calendar patterns for every month of the year (sometimes multiple ones) … And next week, I’m going to reveal the most important one right now and the best ways to trade it – including my haystack strategy. Stay tuned!

Q: Hey Tom, it seems like you’ve been focusing more on options trading in recent weeks. Are you saying that options are better than stocks when it comes to making money in the market? I’m asking because I’m newer to this and not sure if I’m ready yet to make my first option trade.

A: Thanks for writing in! Many other students of mine have asked me this over the years, and it’s a good question to ask.

I trade options and buy stocks on all five points of the market (stocks, bonds, commodities, currencies, and crypto). My bread and butter, though, is options. I’ve built my career teaching and trading options since the early 90’s. I taught myself how to trade after realizing there was a better path to financial freedom than working 40 to 60 hours a week to make other people rich. I haven’t looked back since…

I’ve made it my mission to give back to others and share all of the knowledge, strategies, and lessons I learned along the way. There are tradeable patterns in virtually every corner of the market – both for buying and selling stocks as well as trading options. And what I love about options is that you can reduce your cost (thereby your risk) down to $500 or less – while boosting your profit potential – on even the most expensive stocks in the world.Options give you the power to control the number of shares of a specific stock you want – and increase your leverage without tying up a large amount of capital in your trading account.

That said, the worst thing you can do when it comes to anything in life is to jump in, headfirst, without knowing what you’re doing or why. I made that mistake as a young, ambitious, and naïve kid in my twenties and ended up paying back thousands from a margin call after Black Monday. So, take your time to familiarize yourself with options – there’s a lot of great content here at Patterns & Profits that I encourage you to read. There’s a reason for the saying “knowledge is power,” and I can’t emphasize enough the importance of education and practice when it comes to trading options.

I’ll be right here with you along the way, too, so feel free to email me at any time. Just remember… I can’t give you any personalized advice, so save those questions for your financial professional.

To your continued success!

Q: Hi Tom, with the election basically a month away, are there any stocks or ETFs related to the election that you like the most right now?

A: Fantastic question! And I’m actually going to get back to this next week because I’ve got something special planned that I want to share with you. So, stay tuned…

Have a great weekend!

Tom Gentile
America’s Pattern Trader