Dear Student,
Happy Fourth!
You’re probably heading to the beach or firing up the grill right now, so I’ll be brief…
A few questions came into the Patterns& Profits Mailbag surrounding the news of the week: President Trump’s ‘Big, Beautiful, Bill.
And since we’re likely to see a final vote over the coming days—even hours—I want to get these answers to you today.
So let’s jump in…
Q: Tom, I’m not asking whether you think the One Big Beautiful Bill will pass or not—but how are you trading with the vote coming any day now?
Great timing on this question. Let me break it down for everyone.
Now, I’m answering these questions as the House is still voting… So by the time you read this, it may have already passed (or failed).
I don’t have a crystal ball on how Congress will vote. Plenty of lawmakers are publicly pushing back on the bill—but sometimes, that still ends in a yes vote. Plenty of lawmakers are publicly pushing back on the bill—but sometimes, that still ends in a yes vote.
So here’s what I’m doing: I’m staying bullish and managing my positions according to the original trade plans. But I’m also prepared to pivot. If the vote—pass or fail—triggers a sharp drop, I’m ready to adjust fast. Most of our trades right now are bullish, so keeping a close eye is key.
Q: What happens if Congress does pass the One Big Beautiful Bill?
Another big, beautiful question.
Remember, the House is still voting as I’m writing, so things may have changed by the time you’re reading this. But to answer your question – it depends on the sector.
If the bill passes, we could see an initial pop in the markets as traders react to the headline. After that? Things might drift a bit while Wall Street figures out what the bill really means long term.
Here’s how it could break down:
- Crypto: We already saw Bitcoin dip to $105,000 right after the Senate passed the bill. The question now is whether the bill’s inflation potential gives crypto a long-term tailwind. We’ll be watching.
- EV & Clean Energy: Not great news here. The bill looks like it could wipe out federal EV tax credits and clean energy incentives. That could hurt automakers and renewable firms—so I’m watching for potential drops in share prices.
And if it doesn’t pass?
We could see a market rally, especially from investors who are worried about rising deficits and inflation. Crypto might stay choppy either way, but EV and clean energy stocks could bounce higher as those tax credits remain intact.
Q: What do you do when you expect a big move—but don’t know which way it’ll go?
Great question—and one that comes up often. There are two powerful options strategies I teach for exactly this kind of scenario: the Straddle and the Strangle.
These strategies are built for volatility. You don’t need to pick a direction—you just need movement. The stock’s got to GO.
Here’s the trade-off: if the stock doesn’t move enough, time decay (Theta) starts eating away at your premiums. That can hurt.
A friend once explained this to his 8-year-old daughter, and she nailed it: “Isn’t that paying twice as much?” Yep—and that’s why you’ve got to expect a big move. Think earnings reports, major news events, economic data drops—things that can really shake the market.
So… what’s the difference between a straddle and a strangle?
- Straddle:
- Buy a call and a put with the same strike price and expiration
- More expensive (both options are at-the-money)
- Needs less of a move to be profitable
- Strangle:
- Buy a call and a put with different strike prices (same expiration)
- Cheaper (both options are out-of-the-money)
- Needs a bigger move to be profitable
Bottom line? If you’re expecting a strong move—but not sure which way—either of these strategies gives you a shot at profit.
Enjoy your long weekend!
Tom Gentile
America’s Pattern Trader
