How To Trade Government-Backed Catalysts

As conservative options traders, we generally prefer to act like the “house” in a casino—selling premium, collecting theta (time decay), and prioritizing risk management above all else. We avoid the wild speculation that wipes out so many retail traders. However, part of being an astute investor is recognizing a massive, undeniable market catalyst when you see one.

Recently, a member of our community asked a very specific, fascinating question: “Is Trump a good stock picker?”This query sparked an excellent discussion on the Option Genius podcast about what happens when the U.S. government—whether through direct taxpayer investment, bailouts, or policy-driven deals—gets involved in private companies. Can individual investors ride the coattails of these government-backed catalysts to generate alternative income? Let’s dive into the geopolitical landscape, analyze five specific “Trump stocks,” and break down the risk management required to trade them successfully.

Navigating the Macro Environment: Oil and Geopolitics

Before analyzing individual stock picks, a conservative trader must always understand the broader macroeconomic environment. Currently, the market is heavily driven by geopolitical headlines, particularly regarding ceasefires and conflicts in the Middle East.

While the indices (like the S&P 500 and NASDAQ) have been pushing toward all-time highs on the back of strong Big Tech earnings, there is an underlying current of risk in the commodities sector. A vital concept discussed on the podcast is the “lag effect” in oil shipping.

Ships that were loaded with oil before recent disruptions are only just now reaching port. This means the global market has not yet felt the true squeeze of restricted shipping lanes. As these delayed reserves run out, we could see oil prices spike significantly. For traders, this highlights the necessity of remaining vigilant and agile. While we might look for bullish equity setups, being aware of potential energy shocks is paramount for protecting your portfolio.

The Core Question: Is Trump a Good Stock Picker?

To answer our community member’s question, we analyzed five companies where the Trump administration previously allocated taxpayer money or struck specific policy deals. As investors, we want to know: Did these investments actually pan out?

Here is a breakdown of the performance of these five unique assets:

• Trilogy Metals (TMQ): When the government bought into this company, it was trading around $2.13. Despite some volatile spikes, it currently sits around $4.55. While it has technically doubled, the company is still losing money and trading sideways, making it a highly speculative hold.

• Lithium Americas Corp (LAC): Backed at around $6.50, this lithium mining stock has since dropped to the $4.60range. This play is currently underwater. Furthermore, other U.S. lithium competitors are outperforming it heavily, making this a clear miss.

• USA Rare Earth: This stock was trading around $18.50 at the time of investment, surged into the $40s, and has since retraced back to $22. While slightly profitable from the entry, the company is still losing money. However, as a national security play (securing rare earth minerals domestically), it remains a vital, albeit risky, long-term watchlist candidate.

• MP Materials (MP): Entered around $30, this stock rallied as high as $100 before settling around $61. This is a 100% gain, and more importantly, the company has recently turned a profit. Out of the mining/materials plays, this chart looks the most fundamentally sound and investable.

• Intel (INTC): The most significant deal of the bunch. Entered by the government around $24, Intel recently gapped up heavily on strong earnings to trade around $81—a staggering 400% increase.

Looking at the overall scorecard, out of five government-backed assets, two doubled, one quadrupled, one broke even, and only one is underwater. By those metrics alone, following the catalyst of government backing has proven to be a highly lucrative strategy.

The Case Study: Capitalizing on Intel (INTC)

Intel represents a fascinating case study in catalyst trading. Recognizing that Intel is essentially “too big to fail” as the premier domestic chip manufacturer, Option Genius’s own Allan decided to place a strategic bet.

Because we are conservative options sellers, buying long calls is rare for us. However, using proper risk management, Allan purchased LEAPS (Long-Term Equity Anticipation Securities) on INTC. By buying calls with months of expiration time, he mitigated the destructive effects of Theta (time decay).

When Intel gapped up 20% in a single day on strong earnings, those LEAPS doubled in value, securing a 100% gain. This brings up the ultimate trader’s dilemma: When do you take profits?

“You just have to take a little foresight in how things are moving right, and then apply the strategy that you want to. That’s the whole point of the show—we have a catalyst, something happened, and how do you make money off of this?”

Even with deep-in-the-money calls and plenty of time left on the clock, a disciplined trader must detach emotionally. When you achieve a 100% return on a speculative, catalyst-driven long call, the prudent, conservative move is almost always to take the capital off the table or, at the very least, sell half to secure your initial investment. No one ever went broke taking a profit.

Final Thoughts: Catalyst Trading with Discipline

The verdict is in: tracking government policy and administration-backed investments can provide excellent stock-picking ideas. However, identifying a winning stock is only 10% of the battle. The other 90% is position sizing, risk management, and having the discipline to stick to your trading plan when the market moves in your favor.

Whether the market is being driven by artificial intelligence advancements, Federal Reserve rate cuts, or geopolitical tension, your primary job as an investor is to protect your capital first and grow it second.

Podcast Transcript: Is Trump A Good Stock Picker?

Allan: So, we are here, another Friday in the books. A couple of hours before the close and we are live. This is the Option Genius Show. My name is Allan, and I’m here with Matt D. How are you doing, Matty D?

Matty D: I get called Matty Ice a lot, too.

Allan: Matty Ice! I say you’re the Italian stallion of trading. [laughter] I’m going to make you a trade you cannot refuse.

Matty D: Get out of here. [laughter] Oh my goodness.

Allan: All right, so today we’re going to be talking about Trump stocks. Is he a true stock picker? We’re going to take a look at the stocks where the administration invested the country’s money and see how they are doing. One of them actually made me a ton of money, so we’ll show you exactly what that trade was and how it’s going.

Let’s take a look at some of these Trump stocks. These are companies where the administration used taxpayer money or made deals. For example, Intel was initially promised money from the Biden administration through the CHIPS Act.Trump came in and said, “We’ll give you the money, but in exchange, we want a piece of the company.” Let’s see how good of a stock picker Trump actually is.

[Chart Analysis Begins]

Allan: First up is Trilogy Metals (TMQ). When Trump and the U.S. taxpayer bought into this company, it was trading at about $2.13. It shot up to about $11 and has since come down to $4.55. It’s actually more than doubled since the U.S.bought in. However, they’re still losing money and the chart is going sideways. It’s a double, but not a home run, and it could easily drop back down.

Next is Lithium Americas Corp (LAC). The U.S. taxpayer bought in back in October when it was trading around $6.50.Currently, the stock is at $4.66. We are actually underwater on this stock. Not good. There are other lithium mining companies in the U.S. right now hitting all-time highs and doing much better. This one was an egg; time to bail.

Then there’s USA Rare Earth. The stock was trading at about $18.50 in October, jumped all the way to $44, hit a low of $11, and is currently at $22. Similar chart—jumped up, came back down, and is meandering sideways. This company is also losing money, though analysts have a $32 price target on it. This is more of a national security play than anything else, ensuring we have domestic rare earth mining.

Next is MP Materials (MP). We got in during July of last year at around $30 a share. This one has a much better chart. It kept rallying, hit a high of $100 in October, and has now come back down to $61. So, from $30 to $61 is a 100% gain.Even better, this company actually started to make money in their last earnings release. It looks much more investable.

Finally, the big boy: Intel (INTC). When the U.S. taxpayer got in, it was trading at $24 a share. Today, it’s trading at $81.It’s up 21% today alone after a really strong earnings report.

Matty D: Look at that gap up right there. Up to $85!

Allan: I wasn’t sure if I wanted to give any of these a shot, but I took a chance with Intel and bought some calls back in January—about three months ago. They have doubled as of today. I didn’t get in when the deal was done in August; I got in months later when the stock was already in the 40s. The stock has doubled, and so have my calls.

Matty D: What made you choose Intel over the others?

Allan: I liked it better because it’s a legit, massive company. They are the biggest chip manufacturer in the U.S., making them effectively “too big to fail.” The government cannot let them fail. If they needed more money, the government would bail them out. If mega-cap names like Facebook or Google needed chips, the government could encourage them to throw business Intel’s way.

Matty D: So, when do you take these calls off?

Allan: I probably should take them off now. You have a 100% gain on a long call. We are fundamentally options sellers; I’m not used to buying calls! I have a beauty right now, but it’s already jumped 20% today. Common sense says take the profit.

Matty D: But these are LEAPS, right?

Allan: Yes, I still have nine months left on them. They’re heavily in the money, so they’re very high delta with a lot of intrinsic value. Theta decay is not going to hurt me right now. But after a 20% jump in one day, I don’t know if it’s going to keep going up unless Nvidia, Broadcom, or AMD post massive earnings that lift all boats.

Matty D: So, bringing it back around: Trump is a good stock picker?

Allan: Out of the five stocks we looked at: two doubled, one went up 400%, one broke even, and only one is underwater.There’s really nothing bad out of those five, and the others still have a chance to recover. So yes, I would say Trump is a very good stock picker—or maybe it’s because he picked them that they did well. Either way, following the catalyst worked, and you can absolutely make money doing this.

Matty D: Alright, you’ll have to let us know when you finally close out those Intel calls.

Allan: Will do! That’s it for today’s show, everybody. Have a happy Friday. Thanks for watching, and we’ll see you all next week!