DailyPlay – Partial Closing Trade (MDT, IEF) – May 2, 2022

Partial Closing Trade

• MDT – 345.31% Gain: Sell to Close 2 Contracts (or 50% of your remaining Contracts) May 19th $82.50 Calls @ $8.55 Credit. DailyPlay Portfolio: By Closing 2 of the 4 remaining Contracts, we will receive $1,701
• IEF – 26.09% Gain: Buy to Close 12 Contracts (or 1/3 of your Contracts) May 19th $99/$100 Call Vertical Spreads @ $0.34 Debit. DailyPlay Portfolio: By Closing 12 of the 34 Contracts, we will be paying $408.

Investment Rationale

Price meandered yesterday but then a mild decline late in the day took the SPX into a minor loss of 2 points. No harm; no foul, as they say. I’m not expecting much to happen until Wednesday’s Fed meeting, so much of what is really being done is really just traders and PMs paring some of their positions before the rate announcement and subsequent press conference afterwards. I tend to me more in the camp that we see a 25 bp. hike on Wednesday and then possibly another one in June. Then a pause – not one that means anything more than that they won’t raise again unless/if the data that comes over the summer suggests that they still need to tighten things up.  I would not take it to mean that their job is done.

Looking at our open portfolio positions, let’s take 2 of 4 MDT calls off today. Price has stalled at the bullish Propulsion Momentum Level of $91.70, and why not lock in some more of the 345% we’re up on this trade. Any daily close beneath $89.57 and we’ll exit the final two calls.

MDT – Weekly

Our IEF short call trade is up 26% in just two days with yesterday’s 12 bp. rally in the TNX. We have 34 of these bearish call spreads on, so let’s take 12 of them off today to lock some quick profit and reduce the trade before tomorrow’s FOMC announcement.

Yesterday MCK got whacked for a 2.8% loss (the stock fell over $10 to $354) and makes our short $370/$380 call spread a little more secure (with 18 days till expiration). If today or tomorrow trades down to the $348.75/.25 area, exit 1 of 3 remaining spreads.

We’ll see what today brings and clean up things a bit more tomorrow to get done before the FOMC announcement. Lastly, I spoke with Tony yesterday and he wants to keep on his short AAPL trade into its earnings report which comes out Thursday after the close.