DailyPlay – Closing Trade (AMT) – September 21, 2023

Closing Trade

• AMT – 42.97% Loss: Sell to Close 4 Contracts (or 100% of your Contracts) Oct 20th $180/$195 Call Vertical Spreads @ $2.92 Credit. DailyPlay Portfolio: By Closing all 4 Contracts, we will receive $1,168. We initially opened these 4 Contracts on August 24 @ $4.85 Debit. Our average gain, therefore, is $193 per contract. 

Investment Rationale

The market’s reaction to the FOMC meeting and Chairman Powell’s testimony is challenging to navigate. Despite bonds and equities selling off, the bond swap market continues to discount the Fed’s language and dot plot. Markets still show only a 28% chance of a rate hike in Nov and still expect rate cuts in the 1st half of 2024. We have to balance the knee-jerk selloff yesterday with the bigger picture view that the bond markets are providing and remain fairly neutral in this market. I advocated for a balance of long and short exposure in the DailyPlay portfolio. Currently, the S&P with its series of lower highs seems to target $4330 to the downside, and if a break below that would target $4100 below that. At the moment, I think it’s best to remove some exposure in trades that are long theta (time decay) that are not working and close out our AMT despite the fact that it has not yet reached its full stop loss level.