DailyPlay – Closing Trade (BYND) – March 8, 2023

Closing Trade

• BYND – 9.78% Gain: Sell to Close 2 Contracts (or 100% of your remaining Contracts)  Mar 17th $17.50/$22.50 Call Vertical Spreads@ $1.01 Credit. DailyPlay Portfolio: By Closing the remaining 2 Contracts, we will receive $202. We partially closed this trade on Feb 17 at @ $1.15 Credit when we closed 50% of our Contracts, then again on Feb 23 at $1.16 Credit. Our average cost basis on this trade is, therefore $1.12 and our average gain is 21.47%.

Investment rationale

“Economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” was not what bulls wanted to hear from Fed Chair Powell. Stocks sold off and never recovered, edging lower as the day wore on, with the SPX closing right near its daily low and down 62 points. Yesterday’s chart created a bearish “evening star” pattern, while also filling the closing gap from last Thursday and Friday’s price action – something I had previously stated would likely happen this week barring very bullish Powell comments.

SPX – Daily

Before we get too bearish, today is another day of Powell testimony, and we need see what investors do with yesterday’s downmove. Friday is the key unemployment report (directly relating to not only the Fed’s mandate to maximize employment, but as they claim they are “data dependent”, will be a major input into deciding what to do with rates next week, along with the upcoming CPI figure that directly relates to their other mandate of lowering inflation). So, as much as we think we got a clue on Tuesday as to what direction the market is now going to move, I want you to also be aware that there is lots more info coming in the next week that can materially influence market direction – potentially enforcing yesterday’s downmove, or potentially moving things in the opposite direction.

We are long 2 BYND March 17th $17.5/$22.5 call spreads, up just 10%. The stock closed yesterday at $18.06. We paid $0.92 cents for our position, and it went out yesterday at $1.01 mid. With it sitting in between the two trendlines drawn below, and 9 days to go with no major catalyst from now till then, I have no issue with you exiting this trade now.

BYND – Daily

Yesterday’s fears of still higher-to-come rates pushed the dollar higher and knocked the recent gold rally right back down to where it was before last week’s bottom was made. Silver lost substantially more, as it often does when economic fear pulls metals lower, as it is far more of an industrially-used metal than is gold.

We are also short an SLV March 17th $20 put that we sold for 55 cents. With SLV trading $18.45, we’re down about $100 on the option position. Personally, I don’t have a problem getting exercised in 9 days and taking ownership of the 100 shares; I like silver over time. It’s up to you if you just want out and take a $100 loss, as it does look like it can head lower to finish the Setup -9 count in two more weeks.

SLV – Weekly