DailyPlay – Partial Closing Trade (GOOGL) – May 16, 2023

Partial Closing Trade

• GOOGL – 4.40% Loss: Sell to Close 3 Contracts (or 50% of your Contracts) June 16th $112/$122.50 Call Vertical Spreads @ $3.91 Credit. DailyPlay Portfolio: By Closing 3 of the 6 Contracts, we will receive $1,173.

Investment Rationale

Stocks edged higher on Monday, with no major catalyst behind the move other than some believing that a debt ceiling deal HAS to get done, and thus, the worries about it not happening become somewhat decreased. It’s as silly a reasoning as it is the press trying to identify the impetus for an up or down move every single day. Moreover, the people they often get their quote from have absolutely no idea themselves, so they just make it up. And the press eats it up because, well, they have to. After all, there has to be some reason why the market moves each day; right?  ;))))

LIT: our position expires on Friday, and the negative news article on the space that came out right after we got into our calls a month ago has cost us all of the theta. It’s a shame, because this may get north of $64 next week.

LIT – Daily

Last week’s bullish GOOGL trade was one of the more interesting ones to learn from, because it gapped up a few dollars the morning we wanted to buy them, and my initial target was reached by 10am that day – the same time of day that we price our portfolio entry price. Frankly, I would not have actually put the trade on myself because of that gap and then the target getting achieved so quickly. Then last Friday some Street firm downgraded the name, so that $117.44 top-of-cloud target has been the right one for starters. I think it makes sense to cut this trade in half, and it’s fairly close to where we put it on, so it should be a minimal loss on this portion.

GOOGL – Weekly

Don’t forget that we’ll still be looking to put on yesterday’s bearish SLV trade if SLV rallies to $22.35/$22.50 on any day this week. (We’d be looking to short the June 9th $22.50/$23.50 call spread at the then current bid/offer spread.)

Lastly, I have found 4 ideas in the past hour while searching to find a new DP I would put on today.  But not one of them has a call spread that we can buy for under 40% of the strike differential, or bearish put spread for more than 25% of the strike differential. It tells me that there is now so very little opportunity to put on equity option trades that have fair pricing. And it’s just another reason that given a meandering market that also has some potential big news coming out any day, that it remains wiser to keep your cash ready for more favorable times to trade than it is to spend it on an over- or underpriced option trade that you hope sees the upcoming news go your way.