DailyPlay – Closing Trades (BKR, UNG) Partial Closing Trade (SRE) – September 28, 2022

Closing Trades

• BKR – 32.43% Loss: Sell to Close 1 Contract October 21, 2022 $24/$26/$29 Call Spread Risk Reversal @ $3.45 Credit. DailyPlay Portfolio: By Closing 1 Contract, we will be receiving $345.
• UNG – 35.81% Loss: Buy to Close 7 Contracts October 21, 2022 $27/$24 Put Verticals@ $2.01 Debit. DailyPlay Portfolio: By Closing the remaining 7 of 14 Contracts, we will be paying $1,407. We took partial profits for this trade on September 16 at a $1.11 Debit. Therefore, the average loss on this trade is 5.41% and the average cost basis to exit this trade is $1.56 Debit.

Partial Closing Trades

SRE -126.14% Gain: Sell to Close 1 Contract Oct. 21st $165/$145 Put Verticals @ $9.95 Credit. DailyPlay Portfolio: By Closing 1 of the remaining 4 Contracts, we will be receiving $995.

Investment Rationale

Yesterday, stocks were first up, then down, and finished mixed depending upon which index you were focused on. The one we do, the SPX, closed down 7.75 points (0.21%) at 3647 – the lowest close of 2022 and is now just 10 points above the June low.

There is a slew of tech names that are getting daily downside DeMark exhaustion signals, and those who are trading mavericks can look for some of them to play should they want. To me, any rally is still a selling opportunity, so I welcome bounces in order to be able to sell into a move higher (something almost always preferable to selling into weakness). I still think the market is going well lower, and after we get the noise out of the way from those looking to buy the test of the June lows, the steamroll will persist. (Think of the bear market possibly on a quick coffee break.) When the SPX gets to 3300/3100, I will put back on the bulk of money I’ve raised throughout the year back into play.

For today, I want to again take off 1 contract of the 5 remaining we have in the long SRE Oct. 21 $165/$145 put spread. (We took the first one off yesterday.) We are now up $126% on these 5, and I am a fan of locking in profits like that, but gingerly so. But it’s sold down to the level it broke out from in July ($154), so let’s take a little more off the table.

SRE – Daily

We’re also going to exit the long BKR Oct. 1 $24/$26/$29 Financed spread reversal today @ $3.45. We’re down 12% on it (not the incorrectly displayed loss showing in the DP portfolio, where the margin was incorrectly calculated).

Lastly, let’s also exit the short UNG Oct. 21 $27/$24 put spread. The remaining 7 contracts we have on are down 60% as I write this.