DailyPlay – Closing Trade (SPY) – March 4, 2024

Closing Trade

• SPY – 28.39% Loss:  Sell to Close 5 Contracts (or 100% of your Contracts) April 30th $490 Puts @ $2.75 Credit per contract. DailyPlay Portfolio: By selling all 5 Contracts, we will receive $1,375. We initially opened these 5 Contracts on Feb 27 @ $4.01 Debit. Our average loss, therefore, is $126 per Contract. 

Investment Rationale

Last week’s economic and corporate earnings reports solidified how investors view the trajectory of our 2024 outlook. Corporate earnings have continued to surprise to the upside and the Fed looks ready to make cuts in the middle of the year. This seems to be enough for investors to continue to push equities higher.

As the equity rally starts to broaden out, there is a growing thesis that despite the overbought conditions and stretched valuations, that this rally still has significant upside potential. Our SPY hedge was meant to protect us against a surprise inflation print and now that the uncertainty has been removed, we also should remove our SPY hedge for a small loss of around 0.5% of our portfolio value, well worth the cost.