DailyPlay – Trade Adjustment (DIS) – October 5th, 2021

Adjustment Trade

DIS Trade Adjustment – 41% Unrealized Loss. Roll Oct 15 $195 Call to November 5, $185 Call to collect more premium:

• Buy to close October 29 $195 Call @ $0.07 Debit
• Sell to open November $185 Call @ $1.56 Credit
• This results in a reduced cost basis for the DIS Call Diagonal Trade from $9.15 to $7.66. 

DailyPlay Positions Outlook:

The short leg of the DIS diagonal spread will expire in 10 days and is almost worthless. This allows us to roll the short leg and continue to offset the trade cost of the long DIS call option by selling an OTM call to reduce the cost basis of the DIS Dec 17 $185 Call and collect more premium. This results in a new cost basis of $7.66 for the DIS diagonal trade. 

Yields rebounded yesterday after a 3-day pullback which caused the major indices to move lower. SPY and QQQ broke below their 100 D MA’s yesterday which is concerning. Support for SPY and QQQ sits at $423 and $342 respectively. Non-Farm Payrolls this week will be an important announcement to gauge the performance of the recovery and give further clues to what the Fed may do regarding monetary tapering. 

Tony Zhang
Chief Strategist & CNBC Contributor