Last week, I shared that I was still cautiously optimistic that we’d visit the April 2 gap down before the end of the month. It wasn’t a very popular opinion, but after two big days in the market we are just 4% away from that level – and the market is up over 3% in just one day right now!
Now, to be clear, “cautiously” is still the operative word here. I am not “all in” on this rally as I will explain in a bit.
But I think this $565 level is the next one to watch:
That would put us right back to “Pre-liberation” day prices and it could even set us up for some clearer direction.
If we broke above that level, it would be the most confident bullish signal since the Jan 13 weekly candle:
Let’s take a quick look at why things have (suddenly) shifted very positively after an ugly start to the week on Monday.
It started with President Trump easing up on two major fronts: the Fed and tariffs.
After days of jabs at Fed Chair Jerome Powell (including calling him a “major loser”), Trump suddenly changed his tune. On Tuesday, he clarified that he has “no intention” of firing Powell and simply wants the Fed to be more aggressive with rate cuts.
That shift alone helped calm some of the anxiety that’s been plaguing Wall Street for weeks. We’re not seeing massive inflows of capital (yet) but the mood feels more optimistic than it has in months.
And it didn’t hurt that most of the financial earnings so far were pretty positive relative to expectations.
Then came the big one: tariffs.
We’ve gone from panic over potential 145% duties on Chinese imports… to hints that those tariffs might get slashed to something in the 50–65% range. That report from the Wall Street Journal hit just as Trump hinted that a broader rollback could be on the table.
Add in positive trade talk progress with India and some surprisingly dovish language from Treasury Secretary Scott Bessent — and suddenly, investors are exhaling.
Even Tesla (TSLA) got a boost. After a disappointing earnings report, the stock still popped 5% — thanks in part to Elon Musk promising he’ll spend less time on DOGE.
Yep, that’s where we’re at.
So with all this bullish momentum, is now the time to go all-in?
Not quite. At least not for me.
Here’s why…
We’re still very much in a headline-driven market. And that means things can change fast. A single tweet or policy leak can flip sentiment in minutes. So while I am leaning into bullish setups where the conditions are right, I’m not parking my capital in medium-term trades and hoping for the best.
In fact, I am fully against medium and long term options trades right now.
Why?
Because the ATR (average true range) is likely to keep falling. I shared this likelihood on our Opening Playbook session last week and it’s been trending since then.
Don’t get me wrong, we’re still on the higher end of volatility, but the “net” movement is starting to slow.
OK, Nate, what does that have to do with options?
Well, options are priced based on “expected move” and so when volatility is high, we have to pay more for those options.
If you’re holding long-term options and the market slows down, those options you bought when volatility was high are going to lose value even if they’re going in the right direction! That’s a horrible spot to be so I am avoiding those altogether.
And that’s why I mainly focus on spreads where I can cut out a lot of that volatility just by structuring a trade the right way.
Like my Tesla trade idea…
The question I asked was a simple one: What percent chance do you think there is that Tesla makes an all time high ($490 a share) by the end of 2026?
Most everyone in the chat said somewhere between 50 and 90…
I, myself, said 50.
In simple math terms, if something has a 50% chance, any payout above 100% is an advantage.
Think of it like this: If you could play a game where you flip a coin and lose 100% on tails, but make 110% on heads, you would play that game all day long, right?
And it would pay out exorbitantly over time. Because the payout is better than the odds.
Well, you could play Tesla to make all-time highs 18+ months from now, not for 110%… but for nearly 800%.
Again, I am not certain Tesla is going up, but strictly from a risk-to-reward standpoint, that payoff makes sense to me.
To play out that scenario, here’s what to do:
- Buy to Open the Dec 18th 2026 $480 Call
- Sell to Open the Dec 18th 2026 $490 Call
Place as a Vertical Spread and pay a Debit of: $1.10
The max value of the spread is $10 which means the max profit potential is $8.90 ($10 minus what you pay).
Not bad, right?
In Summary:
I like the potential of this rally, but I am not convinced yet. We need insider buying to pick up and a few key levels to break.
In the meantime, use smart trade structures and hone in on the shorter term opportunities or the most advantageous long term ones (from a risk-to-reward standpoint).
— Nate Tucci
P.S. Like I mentioned, I am not interested in holding long term options, but short term opportunities are really heating up. Check out my Overnight Options Strategy Here for Daily Income Opportunities!
