DailyPlay – Closing Trade (TMUS) – August 1, 2023

Closing Trade

• TMUS – 43.53% Loss: Sell to Close 7 Contracts (or 100% of your Contracts) August 18th $140/$150 Call Vertical Spreads @ $5.48 Credit. And, Sell to Close 4 Contracts (or 100% of your Contracts) Sept 15th $140/$155 Call Vertical Spreads @ $5.48 Credit. DailyPlay Portfolio: With an average cost basis of $9.71 Debit, our loss on this trade is, therefore an average of $423 per contract.

Investment Rationale

With more than 50% of S&P 500 companies reported earnings so far, 80% have beat on EPS while only 64% on Revenue. Stocks that beat on earnings moved on average of 0.2% lower after the report while stocks that missed move on average of 0.7% lower. As we continue to monitor for opportunities during earnings season, we must review our portfolio and cut any underperforming trades. TMUS was one that we added further exposure to after breaking out above its $140 resistance level, but has since traded back into the range. It has now triggered our stops loss levels that we have set and it’s time to cut this loss. While this may hurt to see a winning trade turn back into a loss, we have to remember that it’s more important to stick with our trading plan. Cutting losses quickly and adding to winning positions provides us with the opportunity to hit home runs and remain profitable in our portfolios. What is far worse for your portfolio’s long-term performance is taking a small profit because you didn’t follow your own trading plan. I’m looking to close both the 7 Contracts of Aug $140/$150 Call Vertical @ $1.44 Credit and the 4 Contracts of Sept $140/155 Call Vertical. We will also keep an eye on CAT after it reports with potential adjustments to that trade after the open.