DailyPlay – Partial Closing Trades (USO, KR) – August 9, 2022

Partial Closing Trades

• USO – 44.26% Gain: Buy to Close 1 Contract Aug 12, 2022 $73/$83 Call Verticals @ $1.70 Debit. DailyPlay Portfolio: By closing 1 of the 3 Contracts, we will be paying $170. We closed the 1st of 3 contracts on August 5th and have 1 contract remaining.
• KR – 83.87% Gain: Buy to Close 28 Contracts Aug 12, 2022 $45/$44 Put Verticals @ $0.05 Debit. DailyPlay Portfolio: By closing all 28 Contracts, we will be paying $140.

Investment Rationale

Monday saw but a 12 bps. loss for the SPX, despite some lousy earnings reports out that, could have made for a far worse loss than the 5 pt. drop. So, again, we are seeing a market get bearish news, but not sell-off. That usually means that there is still more upside room to go, as trapped shorts from lower levels are simply not given a chance to get out anything near breakeven. Short squeezes can be and are often vicious.

Today we will take off one of the two remaining USO short $73/$83 spread contracts we have that expire this Friday. Last week we took off the first of three, and with the USO going out on Monday at $73.54, it’s just too close to the $73 strike to do much else with it. (As a reminder, every Wednesday at 10:30am ET the oil market gets the weekly API inventory report. It’s basically the biggest news driver for the oil market each week.) So, tomorrow’s number will determine if that last contract we have on will be a winner or loser. (If you are not comfortable in taking that “gamble” to play that news, then feel free to exit the trade today.  We’ve made money in it.)

USO – Daily

We’re also short an August 5^th XLC $55/$61 call spread, so we’re running out of time for this to work. The We also have a short KR $45/$44 put spread that expires Friday, with 28 contracts on. With that position up 84% with just a few days to go, let’s take off 10 of the contracts today.

KR – Daily