DailyPlay – Closing Trade – Friday Oct 6, 2023

Closing Trade

• XOM – 60.70% Loss: Sell to Close 5 Contracts (or 100% of your Contracts) Nov 17th $115/$125 Call Vertical  Spreads @ $1.45 Credit. DailyPlay Portfolio: By Closing all 5 Contracts, we will receive $725. We initially opened these 5 Contracts on October 3 @ $3.69 Debit. Our average loss, therefore, is $224 per contract. 

Investment Rationale

As 10-year yields hover around the 4.7%, we continue to see a case for equities to grind lower with the Nasdaq-100 holding onto a last major support level. Our base case remains that while big tech has held up, it trades at valuations that are too high in this interest rate environment. We believe that there is downside risk in this sector and maintain short positions to potentially profit from a breakdown of this major support level. However, reviewing our positions, it is unfortunate that XOM has announced an acquisition that has sent the stock down significantly, and requires us to cut losses just a few days after entering the position. However, the discipline of cutting losers quickly and keeping our sights on managing winners is the recipe for profitability in the long run. For now, we must close out our full XOM position heading into the weekend.