DailyPlay – Partial Closing Trade (TLT) – October 6, 2022

Partial Closing Trade

• TLT -19.33% Gain: Buy to Close 2 Contracts Oct. 14th $102/$98 Put Verticals @ $0.96 Debit. DailyPlay Portfolio: By Closing 2 of the 6 Contracts, we will be paying $192.

Investment Rationale

Stocks pulled back on Wednesday, but nothing like I think it should have given the rather significant rally in the DXY (+0.9%). Is this telling us just how bullish investors have turned this week, or was it also related to lighter volumes because of Yom Kippur? I’m not sure, but I suspect we’ll have the answer by Friday after seeing the reaction to the new employment/non- farm payrolls numbers that could easily influence the Fed’s upcoming rate decision next week.

Monday’s daily SPX Sequential -13 that, by chance, came at the 200-WMA gave bulls all they needed to come back with a buying spree, pushing the SPX up 6% in a couple of days. In fact, I’m hoping that today is another higher close day, because if tomorrow’s jobs numbers come in higher than expected, you could see the market give back 100+ SPX handles even before the NYSE opens. (For those of you who trade the pre-open, you want to be ready to make a trading decision as soon as those 8:30am ET numbers get released.)

In the meantime, I want to adjust one of the trades I’ve recently recommended: We are short 6 TLT Oct 14. $102/$98 put spreads. Let’s take 2 of these off today. (Personally, I’d probably do one in the morning and one near the close.)

The DHR short call spread has now rallied to right near the upper “hedge” strike we have on (the $282.50 area). As that is a level I purposely chose as I knew it to be important resistance, I don’t want to take off the trade now until it proves itself up through there. So, we’ll wait until after tomorrow’s numbers come out to see if we exit or not.

Join me at 4:15pm ET today for one of OP’s great educational webinars that I’ll be doing on how to develop and master an “Institutional Mindset”.