DailyPlay – Partial Closing Trades (UNG, LEN, GNRC, GE, MDT) – December 12, 2022

Partial Closing Trades

• UNG – 71.15% Gain: Sell to Close 10 Contracts October 21, 2022 $27/$24 Put Vertical Spreads @ $0.89 Credit. DailyPlay Portfolio: By Closing 10 of 20 Contracts, we will be receiving $890.
• LEN – 62.87% Gain: Buy to Close 1 Contract Dec. 16th $82.50/$77.50 Put Vertical Spreads @ $0.62 Debit. DailyPlay Portfolio: By Closing 1 of 2 Contracts, we will be paying $62.
• GNRC – 65.00% Loss: Buy to Close 2 Contracts Dec 23rd $100/$95 Put Vertical Spreads @ $3.30 Debit. DailyPlay Portfolio: By Closing 2 of 3 Contracts, we will be paying $660.
• GE – 48.98% Gain: Buy to Close 2 Contracts Jan. 6th $85/$90 Call Vertical Spreads @ $1.00 Debit. DailyPlay Portfolio: By Closing 2 of 6 Contracts, we will be paying $200.
• MDT – 23.65% Loss: Sell to Close 4 Contracts Jan 20th $80/87 Call Vertical Spreads @ $1.55 Credit. DailyPlay Portfolio: By Closing 4 of 10 Contracts, we will be receiving $620.

Investment Rationale

With the big CPI number out tomorrow and FOMC rate announcement/press conference on Wednesday, investors are poised for a potential game-changing move into year’s end. (These numbers will likely be THE driver of which direction we see trade through New Year’s.)

I remain in the camp that the Fed is not likely going to provide a Santa Claus rally, as I think they are lacking in enough data to make any type of pivot that staunch bulls are looking for.  And without that potential bull move from positive numbers/comments, I think the bulls’ calls for a move to 4400 or even 4500 by year’s end is simply farcical.

I do want to reduce some exposure before these numbers come out, making today the day to make the bulk of adjustments. Firstly, let’s remove 50% of our 20 long UNG Jan. 6th $16.50/$18.00 calls that we bought at 52 cents on the low of the move last week. The UNG closed on Friday at $19.29, so price is well-above the hedge strike price, and we’ll happily lock in a 65% partial profit in just four days of holding this spread.

UNG – Daily

Secondly, let’s remove 1 of 2 LEN short Dec. 16th $82.5/$77.5 put spreads. We’re up 63% on this and it expires on Friday.

Thirdly, let’s remove 2 of 3 GNRC short Dec. 23rd $100/$95 put spreads. We’re down 65% on this and I want to take the exposure well down before Wednesday’s FOMC statement.

We’re short 6 GE Jan. 6th $85/$90 call spreads, up 49%. Let’s take 2 of 6 off today.

We’re long 10 MDT Jan. 20th $80/$87 call spreads, down 26%. Let’s take 4 of 10 off today.