Tom Lee: "STRUCTURAL LOW IS IN!" - My Urgent Warning & Options Strategy NOW 🚨

Summary

Wealth and Health Podcast: Tom Lee—"STRUCTURAL LOW IS IN!"

Host: David Jaffee
Episode Date: May 6, 2025

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Episode Overview

In this episode, David Jaffee analyzes market insights discussed by Tom Lee and “Invest with Henry,” focusing on whether the market has already hit a structural low following a period of extreme volatility. The episode emphasizes tactical options strategies for investors in the current sideways or range-bound market environment, while highlighting mentality, key technical indicators (especially the VIX), and evaluating specific stocks and sectors for options trading. The host also touches on the psychological aspects of trading, calling for patience, discipline, and actionable strategies tailored to a time of persistent uncertainty.

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Key Discussion Points and Insights

1. Market Volatility and Structural Lows

• Volatility at Historical Highs

  • The episode opens by contextualizing the current period as "one of the most volatile times" since 2020 and even 2008.
  • Quote:

    “If there's one thing that proves certain for sure no matter what the circumstances are, is that the investor that stays calm and takes advantage of opportunities does far better than investor who panics.” (C, 01:13)

• Significance of VIX Levels

  • Tom Lee’s analysis of the VIX is highlighted, noting the importance of certain numerical thresholds:
    • VIX at 60 (market panic—previously during COVID-19 and the 2008 financial crisis)
    • Closing below 37.56 and then below 31 signal recovery post-structural low.
  • Quote:

    “The VIX above 60 has only happened a handful of times. It happened, of course, this past week, it happened during the GFC, right?” (D, 01:41)

2. Is the Bottom In? Historical Precedent

• Comparisons to Past Crises

  • Detailed comparison of current VIX movements versus those during the 2008 crash and COVID-19.
  • Structural lows typically appear shortly after spikes above VIX 60; as VIX subsides under 31, markets historically are past their lows.
  • Quote:

    “When you close below 31 you were past the low because the low was March '09... during COVID the VIX didn't close below 37.56 until March 24, 2020, and it didn't close 31 until April 2020. But you are already past the low.” (D, 02:23)

• Range-Bound Market Expectations

  • Jaffee expresses a belief in a range-bound market rather than a quick V-shaped recovery, citing continued uncertainty (geopolitics, interest rates, legislative gridlock).
  • Quote:

    “My gut feeling is that we're going to be range bound because there's too much uncertainty. I think that continued volatility is something that we're going to experience...” (B, 02:57)

3. Tactical Options Strategies in a Sideways Market

• Sell Put Options to Monetize Neutrality

  • Selling put options is advocated as an optimal strategy if the market trades sideways, to generate income and position for potential stock ownership at attractive prices.

  • Quote:

    “If the market is going to be range bound to sell put options... the best opportunity will be to still create income and to purchase Companies as they are going back up...” (C, 04:22)

  • Considerations for stock selection (Palantir brought up but host prefers large-cap tech such as Google, Amazon, Microsoft due to stability and recent price action).

  • Quote:

    “I'm not sure that Palantir is the best stock to sell put options on... I believe that a better value play would be to sell put options on something like Google or Amazon or Microsoft...” (B, 03:47)

• Covered Calls and Strike Selection

  • For investors comfortable owning shares, selling covered calls after buying undervalued stocks, or selling puts at a strike where you genuinely want to own the stock, is recommended.
  • Quote:

    “If you're going to sell puts in order to collect extra premium, then you'd want to sell puts at a strike price where you wanted to take ownership of the stock... probably selling a 50 or 60 delta...” (B, 04:53)

4. Psychological Aspects of Options Trading

• Decision Fatigue and Ownership Commitment
  • Host points out a common psychological pitfall: traders lose nerve as prices fall towards their put strike, despite originally being comfortable with assignment.
  • Notable Advice:

    “Anytime you put on a trade, do I feel comfortable owning this security at this strike price? If the answer is yes and the market falls, take ownership... If not, roll, manage or close it out for a loss.” (B, 06:44)

5. Current Sentiment, Caution, and Opportunity

• Loss Aversion and Capitulation

  • Many investors have left markets in frustration; those who remained disciplined are now recovering as the market stabilizes.
  • Limiting further delay is emphasized; now is “the urgent time” to act on new investment opportunities amidst reduced valuations.
  • Quote:

    “Right now is essentially the urgent time that you should be taking action. There should be no more waiting and guessing...” (C, 07:43)

• Cautious Optimism

  • The market is described as having “lost its low” with risk now more asymmetric to the upside, though the environment may remain choppy until macro uncertainties resolve.
  • Quote:

    “I believe that the low is already in, and I believe that we're going to trade sideways until some of the uncertainty is no longer a factor, and then we'll continue to climb higher.” (B, 09:40)

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Notable Quotes & Memorable Moments

• On opportunity in volatility:

  “The investor that stays calm and takes advantage of opportunities does far better than investors who panic.” (C, 01:13)

• On the VIX as a signal:

  “VIX above 60 is basically COVID and the GFC. Now it's coming back down.” (C, 02:09)

• On the psychology of assignment:

  “When they sell a put option... they don't mind getting assigned... But as the market continues to fall... suddenly they no longer want to take ownership...” (B, 06:44)

• On current trading mindset:

  “Now is a good time to be cautiously optimistic.” (B, 06:44)

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Important Timestamps

• [01:13] – Behavioral advantages: Calm vs. emotional investors
• [01:41] – Tom Lee on VIX and structural lows
• [02:23] – VIX historical milestones and implications
• [02:57] – Jaffee on range-bound market and continued volatility
• [03:47] – Stock-specific put-selling strategies debate (Palantir vs Big Tech)
• [04:53] – Covered calls and selecting appropriate put strikes
• [06:44] – Psychological pitfalls: Assignment discomfort in options
• [07:43] – Comparison to 2008; urgent action call
• [08:34] – Current market sentiment and outlook
• [09:40] – Concluding thoughts: sideways trade then gradual recovery

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Summary Takeaways

• The recent market volatility is reminiscent of crisis periods, but evidence (especially VIX history) suggests that a structural low is likely in.
• Investors should focus on generating income and positioning through put selling and covered calls, targeting stocks they genuinely want to own.
• Mental discipline—committing to a position and accepting assignment risk—is crucial for long-term success.
• Now is a good time to cautiously add exposure, taking advantage of temporarily depressed valuations while awaiting resolution of broader macro-political risks.

For further tactical instruction and mindset coaching, follow David Jaffee at BestStockStrategy.com.

Transcript

[A]

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[B]

Wayfair Every style, Every Home. My name is David Jaffe. Welcome to the wealth and Health Podcast where you'll learn valuable skills and positive habits that will improve your life. This podcast originally aired as a video on my YouTube channel at YouTube.com beststopstrategy. The wealth and Health Podcast is brought to you by beststopstrategy.com. Tom Lee we're at a structural low Urgent warning to all investors by Invest with Henry. I watched this video earlier and it's really good. Henry made a lot of good points that I had also made in my trade alerts regarding decreasing volatility and risk levels. So let's go through them.

[C]

This is one of the most volatile times I've seen since 2020 or even 2008. But if there's one thing that proves certain for sure no matter what the circumstances are, is that the investor that stays calm and takes advantage of opportunities does far better than investor who panics investors.

[B]

I agree with that and make emotional.

[C]

Decisions almost always lose. So let's take a couple of minutes and actually look at the technical analysis from Tom Lee and what he thinks is a structural support in this market.

[D]

But there is some significance to the fact that the Vix was at 60 and now is at 31. Let me explain. There's three numbers I want to highlight. The Vix was at 60 on April 7th and then on April 11th the Vix closed at 3756, which is an important level. And then earlier this week it closed at below 31. The Vix above 60 has only happened a handful of times. It happened, of course, this past week it happened during the GFC, right?

[C]

So Vix over 60 is basically Covid. That's 2020 and then 2008, the great financial crisis. That's when we saw Vix over 60. Recently we've also seen Vix over 60 and now it's coming back down.

[D]

Well, let's look at the GFC. Let's use those three dates or those three levels. I marked the Vix above 60, which was October 2008, the Vix falling below 3756 which didn't happen until January 09 and the Vix closing below 31. Well, importantly when you close below 31 you were past the low because the low was March 09 during COVID the Vix didn't close below 3756 until March 24, 2020 and it didn't close 31 until April 2020. But you are already past the low. So I think that we're still at a bull market. I'm just not clear if it's a V shaped recovery like 2020 or my.

[B]

Gut feeling is that we're going to be range bound because there's too much uncertainty. I think that continued volatility is something that we're going to experience where many people are going to be on edge. But as the number of things that could possibly go wrong end up working themselves out, such as tariffs and and China and Iran and Russia and Ukraine and lower interest rates and tax cuts as those dominoes start to fall, then I think the market is primed to climb higher.

[D]

The range market like 2011. Intuitively I'm going to say that it makes sense that we made a bottom, but we're maybe rangebound for a bit.

[C]

This is actually the best opportunity if the market is going to be range bound to sell put options. Exactly what I showed in my yesterday video about Palantir. It's the exact it's not a bad ide.

[B]

I'm not sure that Palantir is the best stock to sell put options on, considering that Palantir's recent price action has been very high. And I also believe that over the past month, Palantir is one of the few tech stocks that have actually increased in price. So it definitely does have strong price action. However, I believe that a better value play would be to sell put options on something like Google or Amazon or Microsoft or even Meta, even though with Meta you have the additional uncertainty of the United States trying to break up the company. However, I do feel that the stock.

[C]

Is oversold strategies that I'm using my portfolio right now I sold puts on Palantir, sold puts on Nvidia. I'm looking at buying Apple stock right now. I'm looking at buying companies, but instead of just buying into them, I'm selling put options. Which supports exactly what Tom Lee is saying. If we're going to go sideways and we get zero returns for the next three weeks, three months, then the best opportunity will be to still create income and to purchase Companies as they are going back up as they have this recovery that's not going to be V.

[B]

Shaped if the market is going to be treading sideways and then in the future it's going to increase. You're probably better off buying shares and then selling covered calls. Or if you're going to sell puts in order to collect extra premium, then you'd want to sell puts at a strike price where you wanted to take ownership of the stock. So probably selling a 50 or 60 delta that way you're pretty indifferent whether you take ownership of the stock or you continue to sell put options and collect a lot of premium that there's.

[D]

Other shoes to drop. I mean the tariff war with China could turn into a cold war. Investors are going to worry about the ripple effects from this shock leading to a global recession. These are extreme views by the way, that some people are going to worry about a financial crisis from all this deleveraging and inflation expectations could surge to an extent that we get greedflation. Remember that's like companies basically raising prices and it's going to force the Fed to hike. And of course, if estimates fall more than 20%, stocks have downside because the stock market already had a 20% drawdown. But the internal low seems to have been in place. This is the percentage of stocks AB the 50 day moving average at the top and above the 200 day moving average on the bottom below 20% is a big deal because over the last 16 years the S&P was higher six months and 12 months later. In fact, if you look at three months later, outside of 2022, the stock market was higher three months later every single time. So I think we did make a structural low.

[C]

So guys, what's really interesting is when there's a lot of fear in the market and the Vix is over 60 and that's basically what we saw in October of 2008 and then a couple of months later In January of 2009, basically we had the bottom. And then when things were recovering in May 2009, then basically the market was past its low as Tom Lee was saying. And we're in a very similar market right now. It looks exactly the same. There's a huge sell off and basically everyone got out of their stocks. But we've already seemed to have hit that low. So a lot of people have lost money.

[B]

I would agree with that. I think that now is a good time to be cautiously optimistic. The problem when you sell put options and this is something that I see quite frequently when they sell A put option. At that moment when they put the trade on, they don't mind getting assigned the shares. However, as the market continues to fall and then that strike price ends up getting challenged, suddenly they no longer want to take ownership of that stock at the strike price. And that's a psychological impediment because when they put that trade on, they had no problem taking ownership of the strike price. But as the stock market fell, then they no longer wanted to own the stock at that strike price. The best way to combat that is to ask yourself, anytime you put on a trade, do I feel comfortable owning this security at this strike price? If the answer is yes and the market falls, take ownership and run the wheel. If the answer is no and the market continues to fall, then you can either roll or manage that trade or you can simply close it out for a loss. That way you don't incur that much stress.

[C]

Many investors have gotten out of the market, have quit investing, have given up on option trading, have given up on long term investing, short term investing, they're out, they're done. And now that we're getting a recovery, the investors that have been holding, then you have started to recover your money. We're going to get a slower recovery, unlikely to have a V shaped recovery because we already had so many V shaped recoveries since 2020. Of course there were many recoveries. But right now I think investors are going to be more cautious. And it's really important to directly compare this to the Vix and 2008 crisis because there's a lot that we can learn here. The Vix was at 60 before the market fully crashed and hit a low. Then after the low, the VIX settled down around 30, marking the passing of the market's low. So what does this mean for the market crash happening right now? It means right now is essentially the urgent time that you should be taking action. There should be no more waiting and guessing because, yeah, I think that right.

[B]

Now is a good time to establish new positions in some of your favorite companies at prices that are 20 or 30% below where these same stocks were trading at just a few months ago. Let's stop it there. We don't have to go through the rest of the video, but this is a good video by Henry and it's something that I definitely agree with him on. Where psychologically people are always concerned that the bad times are going to continue. However, the market is telling us through numerous indicators, by looking at vix, by looking at vvix, by looking, by also looking at some of the recent price action that even if the market trades sideways and doesn't increase, the low is probably behind us now. The market is very sensitive to geopolitical issues and also interest rate decisions, and it seems that many branches within the US Government are at odds and fighting one another. That's something that I've never experienced in my lifetime, and because there's not a historical precedent to something like this, I have no idea how the market's going to react to additional uncertainty. However, what I can say is, if I was a betting man, I believe that the low is already in, and I believe that we're going to trade sideways until some of the uncertainty is no longer a factor, and then we'll continue to climb higher. David Jaffe with beststockstrategy.com if you like this video, then please subscribe and leave it a like and watch the video that's popping up on your screen right now because YouTube believes that you would enjoy it the most. Visit beststockstrategy.com and submit your email address to receive invaluable free training. Please give this podcast a positive reading and review. If you have any questions, visit beststockstrategy.com and send me a message.

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