DailyPlay – Closing Trade (ACN) Partial Closing Trades (DE, UAL) – July 27, 2022

Closing Trade

• ACN -60.53% Gain: Buy to Close 1 Contract July 29, 2022 $280/$270 Put Verticals @ $1.50 Debit. DailyPlay Portfolio: By closing the remaining 1 of 2 Contracts, we will be paying $150. We took partial profits for this trade on July 19 at a $3.80 Debit. Therefore, the average loss on this trade was –1.32% and the average cost basis to exit this trade is $2.65 Debit.

Partial Closing Trades

• DE – 65.76% Loss: Buy to Close 1 Contract Aug 12, 2022 $295/$315 Call Verticals @ $15.25 Debit. DailyPlay Portfolio: By closing 1 of the 2 Contracts, we will be paying $1,552.
• UAL – 67.66% Loss: Buy to Close 3 Contracts Aug 19, 2022 $38/$47 Call Verticals @ $0.98 Debit. DailyPlay Portfolio: By closing 3 of the 6 Contracts, we will be paying $294.

Investment Rationale

Right off the bat, today is Fed Day, so we will not be putting on a new trade today: it would be a complete crap-shoot of which way to play the market’s reaction to whatever news comes from both the 2pm FOMC release, as well as Chairman Powell’s remarks at the 2:30pm press conference. Thanks, but no thanks.

However, we do have some positions on that we can make adjustments to.  Let’s start with our short ACN July 29 $280/$270 put spread. This expires in three days, and the stock closed on Tuesday at $285.18. We only have 1 contract on, so let’s take our ~60% profit on it and be out before Fed time.

Secondly, we have on a short DE $295/$315 call spread expiring in 17 days.  Price is above the upper strike (i.e., the “hedge” level) and we’re down more than 50% on it. So, let’s remove 1 of the 2 spread contracts we have today.

Lastly, we’re long a UAL August 19th $38/$47 call spread. The stock closed at $35.34 yesterday, and we’re down 68% on it. If after the 2 pm Fed news the stocks is trading (or trades) below this week’s low of $35.19, sell out of 3 of the 6 spreads we are long.

The market is pricing in a 75 bp. raise in rates today. I’d think it would come in at that level, but even if it does, it’s all about the language/tone of the statement, as well as what Powell says afterward that players will most key off of.