DailyPlay Closing Trade (DIS) Partial Closing Trades (LLY, NKE) – April 22, 2022

Closing Trade

• DIS: 79.64% Loss: Sell to close 8 May 6, 2022 $131/$139 Call Verticals @ $0.57 Credit. Let’s start with our long DIS May 6 $131/$139 call spreads.  With the triple bottom now having given way – and both the NFLX news and the Florida governor proposing taking beneficial tax status away from Disneyland – the stock is not likely going to find a lot of fans, now.  We will officially take the position off today. DailyPlay Portfolio: By closing 8 contracts, we will be receiving $456. 

Partial Closing Trades

• LLY: 12.42% Loss: Buy to close 2 May 6 $292.50/$285 Put Verticals @ $3.53 Debit. Next, we put on a bullish LLY put spread yesterday (i.e., short the May 6th $292.5/$285 put spread).  The support area we were looking to hold did not hold, and as such, I want to cover back half of this trade today. (I’m hoping the Propulsion Exhaustion level at yesterday’s low will in fact hold, but there’s no reason to hold the full position.) DailyPlay Portfolio: By closing 2 contracts, we will be paying $706. 

• NKE: 65.54% Gain: Sell to close 3 May 27, 2022 $128/$140 Call Verticals @ $6.87 Credit.  Lastly, we will exit half of our long NKE May 27th $128/$140 near spread near today’s close IF it is trading beneath $135.28 late in the day (i.e., ~ 3:45pm ET).  If it’s above there, we will remain long in the full position. (I recognize that you may not be used to trading like this, but it is the way the pros trade.) DailyPlay Portfolio: By closing 3 contracts, we will be receiving $2,061 (based on yesterday’s closing price. However, this is dependent on the closing conditions mentioned above). 

Investment Rationale

With the market making it difficult to figure out which way it wants to move for longer than 48 hrs., we are going to use today to clean up several positions we have on. Of note, one of the things I will try to do going forward is to lighten up on trades that aren’t going our way fairly quickly after putting them on. To me, as a technically-oriented trading strategist, if your trade idea doesn’t work after a few days, then your entry reason has probably been partially or completely nullified. If that’s the case, it then makes sense that one does not hold onto the full position, if at all. So here are some positions we have on that I want to trim today at some point before the close. (If I had to guess (and I’m writing this Thursday evening with futures flat), Friday could see a rally — offsetting some of Thursday’s losses which seem overdone, given that Fed Chair Powell’s saying that “50 bp. hike is on the table for the May FOMC meeting” was not different than what the Street already expected. Thus, if I’m going to sell out of a losing long position tomorrow, I’d probably think of doing it closer to the end of the day than doing it right after the open.