DailyPlay – Closing Trade (TLT) – February 6, 2023

Closing Trade

• TLT – 97.84% Gain: Buy to Close 1 Contract (or 100% of your remaining Contracts) Feb 17th $100/$95 Put Vertical Spread @ $0.04 Debit. DailyPlay Portfolio: By Closing the remaining 1 Contract, we will be paying $4. We partially closed this trade on Jan 9 when we closed 2 Contracts at $0.66 Debit, then on Jan 17 when we closed 1 Contract at $0.39 Debit, on Jan 31 we closed 1 Contract at $0.16 Debit. Our average cost basis for this trade is therefore $0.38 Debit and our average gain on this trade is 79.35%.

Investment Rationale

Stocks sold off on Friday as the large jobs numbers don’t gel with the Fed’s goal of slowing the economy. Technically, the SPX reached above the 4148 bullish weekly Propulsion Momentum level last week but then closed beneath there. Along with several other things I’m looking (i.e., bullish sentiment having reached as high as 66% bulls last Thursday; UST 10-yr. bond rates again having held above the weekly 3.50% Base Line level after being under 3.4% a day earlier; the and DXY marking a new low last week before rallying sharply on Friday above its downtrend line), I’m looking for the recent rally in the SPX to give back as much as 5% in the near-term to target ~3900 to 3850.

I want to exit our last remaining TLT short Feb. 17th $100/$95 put spread today, up 98%.

We will stay short the ABBV put spread because I think that Health Care stocks will hold up better during this possible decline (as will any classic defensive sector). Our UNG short is against us, but I think the almost 5 weeks we have till expiration should be enough time for natgas to see a decent trading bounce take place.