DailyPlay – Closing Trade (CRWD) – March 2, 2023

Closing Trade

• CRWD – 30.15% Gain: Sell to Close 1 Contract (or 100% of your Contracts) Mar 10th $94/$130 Call Vertical Spread @ $23.18 Credit. DailyPlay Portfolio: By Closing the 1 Contract, we will receive $2,318. 

Investment rationale

UST 10-yr. rates are now just a tick under the 4.0% level, and equity investors are not taking kindly to the recent surge in yields. Yesterday saw further S&P 500 selling, with the benchmark index down to 3951, just 11 points above its 200-DMA and now only about 110 points above the Dec. 31 closing mark – meaning that investors have now seen the market give up 240 points from its 2023 closing high. Those who have stayed bullish have paid the price of sticking with their conviction in a market that I do not think will yet pay steadfast bulls or bears.

SPX – Daily

As I mentioned yesterday morning, the SPX would likely mark a daily Setup -9 count on Wednesday, and with it also having sold down to its TDST Line support (3949) and near its 200-DMA (3940) and cloud high and low (3933 and 3923, respectively), we are at an important inflection point.

I don’t know which way this is going to trade from here, but I’d be carefully watching the dollar and fixed income markets for clues, because I don’t think the SPX is gonna stick around here very long at all. Either a kerplunk comes in the next few days, or a rally back to 4025-4050 will likely occur. (BTW- the ICE BofA credit spread we always watch has widened out 10 bps. from its recent low. That came right from its major uptrend line, suggesting some increased macro concerns.)

We have an XLF option that expires tomorrow. We’ve lost the bulk of the debit cost on the put spread, but price ($35.60) is right near our long strike price of $35.50, so I think we need hold this position till tomorrow to have a chance of recouping some of the premium paid.

We are also long a single CRWD March 10th $94/$130 call spread. The stock marked a +13 signal three days ago, and these past three days has also stalled right at the top of the daily cloud as well as against its TDST Line. If we had multiple contracts on, I’d be taking half off, but as we only have one, you need make a decision as to possibly seeing this breakout upside now and running to $126/$130, or seeing it fall to $115ish. (Personally, I’d now exit on any daily close that is less than the close from four days prior.)

CRWD – Daily