Investment opportunities in the market storm, make good use of tools to seize opportunities.

The recent performance of the US stock market has been very volatile. Since May 12, the market has anticipated some easing of trade risks, leading to the formation of a "TACO" trade sentiment. $S&P 500 Index(.SPX.US)$ The index has risen above the earlier double-top neckline of 5773 points, and it has formed a solid short-term upward trend. However, with the recent controversies surrounding the US's "One Big Beautiful Bill" (the local name is "大美麗"; here referred to as "Big and Beautiful"), the S&P 500 Index encountered resistance near the 6000-point mark and even turned back on Thursday.

The "Big and Beautiful" bill is highly controversial, with the relationship between US debt and Tesla's deals being one of the most concerning focal points in the current market. Following the back-and-forth between Musk and Trump on the X platform, Tesla's stock fell 14% to $284.7 on Thursday, June 5. However, with rumors of the two possibly collaborating again surfacing on Friday, Tesla's stock rebounded over 6% in after-hours trading, briefly rising above the $300 mark.

For many investors, the "Big and Beautiful" bill may not be well understood, so today's Futubull article will introduce this related bill and help determine the short-term market operations.

Big and Beautiful Bill

Trump's latest tax legislation passed the House of Representatives on May 22, 2025, named "One Big Beautiful Bill", abbreviated in Hong Kong as "Big and Beautiful Bill". It is currently awaiting Senate review. The bill aims to extend the tax reduction policies from 2017 and introduce temporary tax cuts. However, this bill is not merely a tax cut measure; in addition to extending the tax incentives from 2017, it plans to prematurely terminate electric vehicle tax credits under the Biden administration's Inflation Reduction Act. The purpose of the whole bill is not just to stimulate the economy but to try to resolve some of the contradictions that Trump believes exist in the US market, with the improvement of the US fiscal deficit being one of the goals. This involves complex economic discussions, which will not be the focus today, but investors can first understand the contradictions and controversial points involved. For example, the following two viewpoints:

1. The bill passed the House of Representatives on May 22, 2025, by a slim margin of 215 to 214.

The bill has faced numerous controversies in the market. Democrats criticize that it may exacerbate wealth inequality, with tax cuts primarily benefiting high-income groups, while cuts to medical and food assistance could impact low-income families. On the other hand, Republican Chairman Jason Smith emphasized that the bill will increase families' real income by $0.013 million and create 7 million jobs.

2. Risk of U.S. Debt

Trump referred to it on Social Media as "the most important legislation ever," reflecting his emphasis on the bill. However, according to AP News, the bill is expected to increase the fiscal deficit by approximately $2.4 trillion and leave 10.9 million people uninsured, while analysis from the Tax Foundation estimates that the tax cuts will lead to a revenue loss of $4 trillion (from 2025 to 2034).

The market has been worried about U.S. debt in June, primarily due to the rapid growth of national debt and the possibility of hitting the debt ceiling. Research shows that the U.S. national debt could exhaust extraordinary measures by August or September 2025, and June itself is already facing some early risks. The current controversies surrounding the bill undoubtedly further increase the market's risk-averse sentiment.

U.S. bond yields reflect that the market is not pessimistic.

However, from $U.S. 10-Year Treasury Notes Yield(US10Y.BD)$ the performance perspective, it seems that the market is not as negative about the proposal as originally thought. Since the proposal passed in the House of Representatives on May 22, the U.S. 10-year bond yield has also fallen from a high of 4.629% and formed a decent downward trend. $U.S. 30-Year Treasury Bonds Yield(US30Y.BD)$ It has also dropped below the psychological barrier of 5% from 5.156%, with the latest report being below 4.9%.

The reason for the above is believed to be mainly because the market firmly believes that the issues surrounding U.S. debt can ultimately be resolved through the debt ceiling mechanism, along with the high probability that the Federal Reserve will begin to cut rates in the second half of the year. Although long-term bonds have high interest rates, short-term bonds will still be an important element in effectively maintaining debt stability. As long as the rate-cutting cycle continues for a long time, combined with the Red Sweep during last year’s elections (the Republican Party having a larger number of seats in both the House and Senate), the problem is very likely to be ultimately controllable.

Related ETFs for VIX Futures: $iPath Series B S&P 500 VIX Short-Term Futures ETN(VXX.US)$ $ProShares Ultra VIX Short-Term Futures ETF(UVXY.US)$ $2x Long VIX Futures ETF(UVIX.US)$

Example of Tesla: Effectively using derivatives.

Regarding US stocks, there isn't much to worry about, but it's more difficult to determine Tesla in the events, considering Trump is focusing on related bills and tax incentives for electric vehicles are trending down in the global market. However, as long as the competitiveness of electric vehicle products remains, the impact may not be as significant as imagined. Although the trend is hard to determine, the following thoughts and derivatives can be used for operations.

In the judgment of Tesla, it is believed that the short-term trend is largely based on remarks from key figures involved in related events on Social Media. For example, the above remarks may be the main reason driving the stock price to rebound during after-hours trading. The trend suggests that Tesla's stock price is likely experiencing significant volatility, which undoubtedly presents an opportunity for short-term investors. The most important aspect for short-term investors is to follow the remarks of some influential figures, as trading with the trend will be a key point. Additionally, it cannot simply rely on daily charts for judgment.

For short-term investors, tools like ETFs can be used to increase returns, as some double-leverage ETFs for individual stocks will fully bring out the benefits. The rising IV leads to higher cost risks (option premiums will become relatively high), but leveraged stock ETFs can avoid the above risks. Considering Tesla's strong volatility, it is believed that the returns brought by the double-leverage ETFs can be quite substantial.

TSLA double positive ETF: $Direxion Daily TSLA Bull 2X Shares(TSLL.US)$ $CSOP Tesla Daily (2x) Leveraged Product(07766.HK)$

TSLA 2x inverse ETF: $Tradr 2X Short TSLA Daily ETF(TSLQ.US)$ $CSOP Tesla Daily (-2x) Inverse Product(07366.HK)$

For medium-term investors, if looking to take this opportunity to buy Tesla at a low price for medium-term investment, it may also be possible to use Options as an entry point. Compared to directly buying in anticipation of a rebound, consider shorting a put option to earn the option premium first, with the worst-case scenario being simply taking delivery for medium-term investment. After all, Tesla's IV has increased, making it easier to earn option premiums, while also serving as a hedge in case the rebound fails.

Considering that Tesla's future development focuses on FSD, energy, and robotics, as long as there is no obvious market risk, it is believed that the stock price will not undergo significant adjustments, and it could even present a buying opportunity recently. Therefore, compared to the reduction of tax incentives for electric vehicles, it is more important to pay attention to the performance of the overall U.S. and global economy.

Futu Securities Chief Analyst Tan Zile.

(The author is a licensed person from the Securities and Futures Commission, and neither the author nor their related parties have any financial interests in the suggested issuers.)