DailyPlay – Closing Trade (TXN) – September 20, 2023

Closing Trade

• TXN – 75% Gain: Buy to Close 3 Contracts (or 100% of your Contracts) Oct 13th $170/$180 Call Vertical Spreads @ $1.00 Debit. DailyPlay Portfolio: By Closing all 3 Contracts, we will be paying $300. We initially opened these 3 Contracts on Sept 5 @ $3.95 Credit. Our average gain, therefore, is $295 per contract. 

Investment Rationale

All eyes are on the FOMC meeting today, as Chairman Powell is expected to deliver no rate hikes and an interpretation of the current inflation and employment data. One of the unexpected drivers of inflation is oil as it approaches $100/barrel. This will cause a rise in inflation and a dent in consumer spending as discretionary spend is allocated away from goods and services towards gas tanks. And companies will have to raise prices to pass on fuel costs to consumers as well. Note that the 10-year yields are now firmly at risk of rising towards the 5.2% level, not seen since 2007, which is concerning for current equity valuations. We are going to take this opportunity to close out half of our TXN trade, closing the 3 contracts of the Oct 13 $170/$180 Call Vertical @ $1.00 Debit since we have reached 75% of Max Gain and keep our 5 Contracts of a Put Spread to seek further downside in semiconductors.