DailyPlay – Closing Trade (UNG) – February 22, 2023

Closing Trade

• UNG – 115.46% Loss: Sell to Close 18 Contracts (or 100% of your Contracts) March 10th $10/$12.50 Call Vertical Spreads @ $0.09 Credit. DailyPlay Portfolio: By Closing all 18 Contracts, we will receive $162.

Investment Rationale

The S&P 500 fell over 80 points to below $4,000 yesterday on the back of concerns of higher interest rates. Treasuries yields rose sharply with the 10-year rising 14bps to 3.96%, as the bond market shifts to a more hawkish Fed. Our expectation is that equities will continue to remain under pressure as markets reassess how sticky inflation will likely be and what the Fed’s actions will be to bring it back to their 2% target. SPX has now within spitting distance of its trendline support. A break below trendline support and $3950 would target $3850 to the downside.

S&P 500 – Daily

As natural gas continues its decline and the inability to hold the key $8.50 level over the past few trading sessions, we would take this opportunity to cut losses on our open debit spread. As a rule of thumb with long options positions that are approaching the last 3 weeks of expiration, if the trade is not moving in the expected direction quickly, it’s better to cut losses and reassess the trading thesis and timing. We are at this point going to close out the full balance of the position of UNG and look to reestablish at lower levels and time

UNG – Weekly