DailyPlay – Partial Closing Trades (TSLA, USO, GNRC) – December 7, 2022

Partial Closing Trades

• TSLA – 44.22% Loss: Sell to Close 1 Contract Dec 30th $195/$225 Call Vertical Spreads @ $4.29 Debit. DailyPlay Portfolio: By Closing the 1 Contract, we will receive $429.
• USO – 47.44% Loss: Buy to Close 2 Contracts Dec. 9th $67/$65 Put Vertical Spreads @ $1.15 Debit. DailyPlay Portfolio: By Closing 2 of the remaining 6 Contracts, we will be paying $230. Close another 2 Contracts before Market Close today, and another 2 Contracts by tomorrow.
• GNRC – 50% Loss: Buy to Close 3 Contracts Dec 23rd $100/$95 Put Vertical Spreads @ $3.00 Debit. DailyPlay Portfolio: By Closing 3 of 6 Contracts, we will be paying $900.

Investment Rationale

Stocks took it on the chin again. The press reports it’s from growing recession concerns, but really, they’re no more so now than they were a few days ago. The reality is that the SPX stalled right at its major downtrend line that had just before then seen a daily +13 signal, and all the post-Powell talk rally from last week has completely disappeared. Seems like we’ve seen this same story happen recently… because we did.

Yesterday’s downmove also significantly broke the uptrend line from the 2022 low, and now opens the door for a potential test of the unfilled highlighted gap zone from 3860 to 3818. With 3814 being the bearish Propulsion Momentum level, that 4-point zone along with the gap bottom becomes critical support for those bullish. At this point, I think the only way you see a Santa Claus rally is from a bullish CPI number and/or pivoting Fed next week.

SPY – Daily

Yesterday’s decline took out the TSLA $181.10 level that I wanted to see hold as support. As such, we will remove the $195/$225 call spread that we have on, leaving us with the long $190/$225 spread. I will monitor closely and potentially exit that piece by week’s end.

Crude oil settled down on the year on Tuesday. Who would have thought would be a possibility after earlier this year we saw it trading at $120/bbl.  As for our trade in its associated ETF, we’ve already exited 10 of 16 short USO $67/$65 put spreads we have on. With today having the weekly oil inventory report released at 10:30am ET, let’s take 2 more spreads off around 10am before the number comes out, and we’ll exit another two just before today’s close –  leaving the last two to exit tomorrow.

Our GNRC short $100/$95 Dec. 23rd put spread has now reached just beneath our $95 hedge strike. Though it is showing a weekly -13 this week (and not generally a time I’d sell), having discipline to exit half the trade when we’ve reached a 50% loss is more important to me than hoping that it holds here. So, we’ll buy back 3 of the 6 short spreads we have on today, and if we do shortly see a decent rally, we’ll still be able to make money on the trade.

GNRC – Weekly