Hello, Reader.
Chaos.
It’s a five-letter word that, for better or worse, accurately describes the stock market in 2025.
The “for worse” piece of this equation is all too easy to recall…
In January, the launch of DeepSeek, the Chinese AI competitor to ChatGPT, led to a sharp selloff in the tech sector. The Nasdaq Composite dropped 3.1%, and the move erased approximately $600 billion in Nvidia Corp’s (NVDA) market value.
The administration’s tariffs on Canada, Mexico, and China sent the S&P 500 into correction territory in March. Then, in early April, President Donald Trump’s sweeping “Liberation Day” affected nearly all sectors of the U.S. economy and sent both the Nasdaq and S&P 500 into a bear market.
In May, after one court declared the trade levies illegal, stock markets fell following a different U.S. court’s decision to temporarily reinstate the tariff policies. And this week, stocks fell as apprehensions over renewed trade tensions with China resurfaced.
You get the picture.
In the midst of chaos like this, the idea of a “for better” sounds downright preposterous.
However, what many folks don’t realize is that volatility can be the best opportunity to make money as a trader.
This is my colleague Jeff Clark’s specialty.
I’ve known and respected Jeff for over two decades. And during this time, he has accurately predicted every major market drop this century… and handed his readers over 1,000 winning trades during those volatile times.
He predicted the 2008 financial meltdown… and helped his readers double their money 10 different times during the fallout, with winners like 490% in 25 days from Palomar Holdings Inc. (PLMR).
He also predicted the 2020 Covid crash… and proceeded to hand his readers at least 10 different chances to double their money that year.
In 2022, he predicted the tech crash that sent the tech heavy Nasdaq down 32% that year. But that didn’t stop him from making gains as high as 333% in only two days from Citigroup Inc. (C).
And he predicted the rough start to 2025 all the way back in September of last year.
Now, he’s stepping forward with another shocking prediction.
I recently sat down to interview Jeff about what he sees coming… and how he trades the market right now.
It all comes down to the “chaos pattern” he uses to accurately predict the direction of any individual stock or the entire market.
In our conversation, Jeff shares compelling new research that shows how chaos could soon be dominating the markets once again.
Click on the play button below to watch now. You can also read the full transcript below.
Next Wednesday, June 11, at 10 a.m. Eastern, Jeff is holding an important market update where he will detail everything you need to know about this “chaos pattern” and how you can use it to your advantage, even in bear markets.
Jeff has teamed up with our partners at TradeSmith to create a new powerful stock screener that looks for his “chaos pattern” every single day. His is unveiling this screener for the first time during the event, which he is calling the Countdown to Chaos (register here).
Based on his research, Jeff sees that dozens, if not hundreds, of stocks could soon flash this “chaos pattern” in the coming weeks and months. So, he will also share 10 different opportunities from his powerful new screener – for free – during his special event.
It’s free to attend. But Jeff asks that you register ahead of time by going here.
Regards,
Eric Fry
Transcript
Eric Fry: Hello, Eric Fry here.
Today I’m sitting down with a very special guest, one of America’s top traders, Jeff Clark. He’s a guy I’ve known and respected for more than two decades. In fact, many times over the years I’ve highlighted Jeff’s insights from my own readers and even some of his specific trades.
Our investment style is not that similar, but they are very complimentary, which is why I’m always curious to see what Jeff’s up to. For the past 40 years and counting, he has accurately predicted I think every major market event and helped his readers get in front of a thousand different winning trades. He even predicted the 2008 financial meltdown and helped his readers during that time double their money 10 different times, with winners like 490% in 25 days from Palomar Medical Technologies Inc. (PMTI). Similarly, in the Covid-19 crash of 2020, he handed his readers at least 10 different chances to double their money again in that year from his various trades.
More recently in 2022, he predicted the tech crash in advance of that event, which set the S&P 500 down nearly 20% that year, and sent the tech-heavy Nasdaq down 30%+. But even during that rough period, they didn’t stop him from giving his readers 12 different chances to double their money that year. And so, he captured gains like 230% in just three weeks from Pan American Silver Corp. (PAAS), 333% in only two days from Citigroup Inc (C).
More recently, he predicted the rough start to 2025, and he made that prediction all the way back in September. So during this rough period, he’s given his readers chances to capture gains like 97% in two days from Oscar Health Inc. (OSCR) or 90% in just five days from Marvell Technology Inc. (MRVL). His secret? It’s something he refers to as the chaos pattern, and we certainly have plenty of that around at the moment. So, this unique pattern is a setup which can tip you off to major moves in the broad stock market.
That brings us to today. Jeff has some compelling new research that shows volatility could soon be dominated in the markets once again. So, I wanted to just meet with him quickly and ask him a few questions about what he sees coming and how he views and trades the market right now. That being said, Jeff, thanks for sitting down with me today.
Jeff Clark: Thank you, Eric. I’m glad to be here. Thanks for having me.
Eric: That’s a very interesting term, chaos pattern. Tell a little bit about it. What is that?
Jeff: Exactly? Well, I wish I was the one who came up with it, but it was actually the folks in marketing. I utilize what’s commonly referred to as a reversion to the mean strategy, which basically is an educated person’s way of saying, I look for things that are a little bit out of whack and look for ’em to come back into normal.
If it was me telling the story, I’d say it’s a rubber band pattern. I’m looking for situations where that rubber band is stretched, where conditions are incredibly overbought or incredibly oversold and just waiting to snap back to where they normally historically are. This pattern tends to emerge during periods of chaos in the market, extreme levels of volatility in the market. You can go back to – you talked about what we did for readers back in 2008, 2020, 2022, and then going back to the dot-com bust back in 2001… This pattern exists during all of that time and that time tends to be fairly chaotic or have a lot of turmoil in the market, but that’s also where there’s a lot of opportunities.
And so oftentimes what happens is people get a little bit wigged out or they get fearful of volatility in the market. And really what I try to do is to tell folks that it’s not a fearful event. It’s something that you ought to embrace because that’s what creates the opportunity. And we’ve seen it so far in 2025. We had a wild market that didn’t exist a year ago. 2024 was what we call a non-volatile market. It was basically a one-way grind higher. The rallies weren’t huge and the selloffs were very, very mild. So every day it was just a little bit of a grind. That’s not my kind of a market.
Eric: Let me stop you really quick here. So, to be clear, you’re playing both sides of the market. So, if you see something out of whack, say on the overvaluation side or momentum is too high or however you categorize it, then you’re going to play that with a negative put option, right? And if you see something similar on the undervalued side or low momentum side, you’re going to put that with a call option. Is that correct?
Jeff: Exactly. I’ll trade both sides. But what’s interesting is when we go back to those periods that you talked about, 2008, 2020, 2022, yeah, we had a handful of winners betting on the downside of stocks. But our biggest gains, oddly enough, came from betting on the upside when conditions got remarkably oversold, not unlike what happened just in April. We have these tremendous oversold conditions back in early April, and then this wicked snapback move to the upside. Most of our gains for this year have come betting on the long side caused by that oversold condition.
Eric: Right. So, with your call options, typically how far out in time do you go with them? Are you buying a three month option or a six month? How does that work?
Jeff: Well, there are two ways to do it. When I’m buying an option, I like to buy a little bit of time, so I’ll buy 30 to 60 days. I rarely go any further than that because most of the time these movements, these snapbacks occur relatively soon. But I like to have a little bit of time because it is very uncomfortable if you predict a move, but your option expires before that move has a chance to play out. We’ve all had that situation developed where our option expires on one Friday, and sure enough, the next week the move takes off. I don’t want that to happen. So, I like the idea of buying a little extra time, 30 to 60 days, oftentimes in a very volatile market.
I also use the strategy known as selling uncovered puts, which not to get too complicated, but it’s basically a way of generating income by agreeing to buy a stock at a particular price. So, if you like the idea of buying Intel Corp. (INTC), you can sell an uncovered put that obligates you to buy Intel if it falls below a certain price in a very volatile market because option prices can inflate, oftentimes selling your uncovered put is a preferable strategy to buying a call option.
Eric: That’s also the same as selling a naked put, correct?
Jeff: Yes.
Eric: Okay. We call it a naked put both terms, so I just want to make sure that that’s what we’re talking about.
Jeff: Yes, that’s exactly what it is. And a lot of folks sometimes get kind of concerned because you’re selling a naked put, it sounds like an ominous type of a strategy, but it’s no more different than selling a covered call on stocks that you own. In fact, it’s the same risk reward parameter, but oftentimes in a period of extreme volatility in the market, because option prices are expensive, it makes more sense to sell an uncovered put than it does to buy a call option.
Eric: So, some of these things can sound a little scary and intimidating to a lot of investors. What percentage would you say of your trades during the course of a year are simply buying a call option, betting a stock’s going to go higher as opposed to any other kind of trade?
Jeff: Last year, because of the environment we were in with a low volatility, option prices were relatively cheap. So last year, I would say better than 80% of my trades involved buying options. This year, because option prices have expanded, they’ve inflated, I’d say it’s probably more of a 50/50, maybe 60/40, 60% is buying and 40% is selling. And I expect that’ll probably be the case throughout the rest of the year.
Eric: Do you feel that investors – because I know a lot of times people want to get comfortable with options, right? As they move into the strategy and get comfortable with your approach and so on… So, if they don’t touch any of the more, call it exotic – although it’s not those exotic trades like selling naked puts – are there still plenty of trades during the course of the year to get?
Jeff: Absolutely. One thing I want to clear up a little bit when we talk about options is that oftentimes people think risk right away. They think risk, they think leverage. They think gambling, and that’s common for folks to do. And oftentimes if you talk to people about their experience and trading options, it’s usually negative and it’s because they’ve probably done things incorrectly. Options were designed originally as vehicles to reduce risk, right? That’s what I use them for. I hate losing money. I’m 60 years old, I don’t bet the ranch anymore. I’m not looking for 3000% gains on a fly by night company. I’m looking for ways that I can increase my rewards when I’m right and reduce my risk when I’m wrong, and that’s what options allow me to do.
For example, if you’re looking at buying the SPDR S&P 500 ETF (SPY), it’s trading around $570. So, if you wanted to buy a hundred shares of it, it’d cost you $57,000. I can create the same sort of a situation where you can profit off of SPY, just like owning the stock for $500. So the other $56,500 is sitting safe, locked up in a nice tiny little money market fund treasury bill. No worries on that. My $500 is at risk. Most people that buy the S&P 500 might be willing to risk 10%, 15%, or 20%. Well, that’s $5,700, $7,500, $10,000 you’re willing to risk owning that. I’m risking just $500. If I want to get things more exciting, I might buy two options. Maybe if I’m feeling really good, three. Rarely ever more than that.
Where people make their mistake is instead of buying $57,000 worth of stock, they take the entire $57,000 and put it in options. And then of course the option expires worthless, and they’ve lost everything. They’ve blown up their account. That’s the problem when people use options the incorrect way. The right way is to look at it as a vehicle to reduce risk. So anytime you’re taking on a new position, my first question is, how much can I lose? Unfortunately, what a lot of folks do these days is they say, how much can I make? And then they try to accentuate that. I take the opposite approach, and when you have a market environment like we’re having right now, there’s going to be lots of opportunities to make money. You don’t have to make a killing on one trade. Just have a consistent strategy that allows you to earn money on multiple trades as you go through this process.
Eric: Yeah. Okay, great. My final question is more of a timely one. Are you seeing any particular areas of interest right now, either on the buy side or on the sell side?
Jeff: Oh, absolutely. The problem is by the time this airs, it may be different, and that might be just a few days from now because the market is moving so quickly. Again, what I try to look at is I look for situations where we have incredibly overbought conditions or incredibly oversell conditions and just look for them to move back. A month ago, I would’ve had a different conversation with you. I was looking at semiconductor stocks, which is where Marvell Technology came in, healthcare stocks, which is where Oscar Health came in, and we did really well on those. Today I’m looking more in the oil patch for stocks that I might be interested in purchasing, and I’m looking at semiconductor stocks as possibly stocks to bet on the downside with, because they’ve completely flip flopped and they’re now overbought from an oversold condition.
So, it’s a dynamic philosophy and it’s really… I can’t oversimplify it enough. It really is no more complicated than looking at a rubber band and saying, okay, we’re overextended. Let’s bet on it snapping back.
Eric: Well, I think like you. I firmly believe that options – used well – are an all-weather strategy. But certainly in this environment where there is, let’s call it more volatility than usual, the opportunities both to capture short-term option gains and/or to hedge against short-term volatility are probably as numerous as they’ve ever been.
Jeff: Yeah, I agree. And that is the benefit of using options in a volatile market.
First of all, they tend to be short-term oriented, so you need to do something with the trade in a short-term basis. You’re moving in and out a little more frequently than if you just simply own the underlying stock. So, you’re encouraged to take profits off the table quickly. A lot of folks sometimes look at that and go, well, geez, I left too much money on the table.
There are always opportunities. You never go broke taking a profit. I’ll throw any number of cliches out about that. But the bottom line is what we’re trying to do is to generate profits on a consistent basis. We’re not trying to hit a grand slam every time we step up to the plate. I’m happy if readers and subscribers can make several trades in a row where they’ve doubled their money. Nobody’s going to complain to me about that. They are going to complain to me a little bit if I swing for the fence every time and strike out.
Eric: Absolutely.
Alright, well there you have it folks. Jeff, thank you very much for sharing your insights and giving us details about your trading tactics and your strategy.
As I mentioned at the top of this video, Jeff’s one of the premier options traders I’ve ever known, and he’s got a fantastic track record. So, if you want to learn more about Jeff and his unique strategy for finding big winners and/or hedging in an expert fashion, then I encourage you to sign up for his Countdown to Chaos event on June 11th at 10 a.m. Eastern time.
At that event, you’ll learn about Jeff’s latest market prediction and how it could help you double your money at least six different times over the coming 12 months. Simply click the link below this video to read more about what you’ll learn. And thanks again for joining us today.
Jeff: Thanks everyone.
