Exits, 12/16/2023
Exits, 12/16/2023
How we did on the trades we exited this week.
Dids/Pexels
This Week’s Trade Exits
As soon as I exit a trade, I note that in the comments of the post where I first mentioned the trade; at the end of the week, I try to track them all in one post. These are the trades I exited this week:
Stocks or Exchange Traded Products
None.
Options Trades
Call spread on MBIA (MBI 0.00%↑). Entered at a net credit of $0.50 on 11/15, and then things got complicated: the company declared an extraordinary cash dividend, one leg of the calls got exercised, etc. Details in the comments here. Loss: 110%.
Calls on the ProShares Ultra Bloomberg Natural Gas ETF (BOIL 0.00%↑). Entered at $0.95 on 3/21; expired worthless on 12/15. Loss: 100%.
Puts on Western Alliance (WAL 0.00%↑).Entered at $4.40 on 6/1; expired worthless on 12/15. Loss: 100%.
Puts on UMB Financial (UMBF 4.55%↑). Entered at $2 on 6/6; expired worthless on 12/15. Loss: 100%.
Put spread on Applied Optoelectronics (AAOI 0.00%↑). Entered at a net debit of $1.15 on 7/13; expired worthless on 12/15. Loss: 100%.
Call spread on Marine Products (MPX 0.00%↑). Entered at a net debit of $2 on 8/22; expired worthless on 12/15. Loss: 100%.
Put spread on Semtech (SMTC 0.00%↑). Entered at a net debit of $0.29 on 12/6; expired worthless on 12/15. Loss: 100%.
Put spread on Cooper (COO 0.00%↑). Entered at a net debit of $3.55 on 12/6; expired worthless on 12/15. Loss: 100%.
Put spread on Smuckers (SJM 0.00%↑). Entered at a net debit of $2.74 on 12/4; expired worthless on 12/15. Loss: 100%.
Put spread on Hawaiian Electric Industries (HE 0.00%↑). Entered at a net debit of $1.10 on 8/17; expired worthless on 12/15. Loss: 100%.
Puts on Hawaiian Electric Industries (HE 0.00%↑). Entered at a net debit of $2.10 on 8/17; expired worthless on 12/15. Loss: 100%.
Call spread on Adobe (ADBE 0.00%↑). Entered at a net debit of $1.15 on 12/13; expired worthless on 12/15. Loss: 100%.
Call spread on Advance Auto Parts (AAP -2.46%↓). Entered at a net debit of $1.85 on 8/22; exited at a net credit of $0.05 on 12/14. Loss: 97%.
Put spread on Torrid (CURV 0.00%↑). Entered at a net debit of $1 on 12/7; exited at a net credit of $0.10 on 12/15. Loss: 90%.
Put spread on Peloton (PTON -5.73%↓). Entered at a net debit $0.28 on 8/23; exited at at a net credit $0.16 on 12/14. Loss: 43%.
Call spread on Casey’s General Stores (CASY 0.10%↑). Entered at a net debit of $3.50 on 12/11; exited at a net credit of $4 on 12/12. Profit: 14%.
Put spread on Peloton (PTON 0.00%↑). Entered at a net credit of $0.88 on 8/23; expired worthless on 12/15. Profit: 68%.
Call spread on TJX (TJX 0.00%↑). Entered at a net debit of $1.18 on 8/15; exited at a net credit of $2 on 12/13. Profit: 69%.
Comments
Stocks or Exchange Traded Products
Another week with no exits, as our core strategy of buying our top ten names and holding them until they get stopped out (and then replacing them with a new top ten name) continues to perform well. As we noted in our top names post on Thursday, 17 of our 23 top names cohorts this year so far have outperformed the market.
Options Trades
December 15th was a big options expiration date, and we had trades from March 21st until this week expiring then, including a number of trades that expired worthless. Let’s go through these see what we can take away from them. We’ll close with a look at my biggest regret from this week: the one that got away.
MBIA (MBI 0.00%↑). A $7 and change stock with weak fundamentals that had just missed earnings before we bet against it declared an extraordinary cash dividend of $8 a couple of weeks later. I probably could have limited my loss to 100% had I exercised the other leg of the spread before the dividend, but I sold it instead. This was a bit of a mess.
ProShares Ultra Bloomberg Natural Gas ETF (BOIL 0.00%↑). Natural gas was trading at multi-year lows, and a top market technician thought it was a bottom. This was a bet on it to go higher, but there appears to be no shortage of natural gas in the U.S. and it didn’t.
Western Alliance (WAL 0.00%↑) and UMB Financial (UMBF 4.55%↑). Regional banks. These were being pressured by high money market rates, and these banks in particular looked like they had exhausted the new federal bailout program, per metrics devised by a banking expert. Apparently, they hadn’t. Every week, there are more headlines about regional banks being under pressure, but I think I’ll wait until we see another fail before considering betting against this sector again.
Hawaiian Electric Industries (HE 0.00%↑). These were bets on the utility tumbling further due to costs associated with the wildfire in Maui. We made money on a shorter-dated bet against HE, but these didn’t work.
Peloton (PTON -5.73%↓). We had two trades here, a debit call spread, and a credit put spread. I made money on the credit put spread but lost money on the debit call spread, due to a bit of bad luck. I lowered my exit price on my GTC sell order this week, since we were approach expiration, and then the next day PTON spiked 12% intraday on news it had hired a new chief marketing officer. Had I exited during the spike, I would have made money on both trades.
Applied Optoelectronics (AAOI 0.00%↑), Advance Auto Parts (AAP -2.46%↓), and TJX (TJX 0.00%↑). What these all have in common is they were long-dated spreads, a post-earnings trade in the case of AAOI, and pre-earnings trades in the case of the other two. Had the AAOI and AAP trades been shorter-dated (expirations within a few weeks of when I entered them), I would have made money on all three. Both AAOI and AAP were in the money early, but I held them and they went out of the money and expired worthless. My bias has been to use shorter-dated debit spreads since.
Semtech (SMTC 0.00%↑), Cooper (COO 0.00%↑), and Smuckers (SJM 0.00%↑). These were experimental trades based on signals from a tech company applying its artificial intelligence to stock predictions. The experiments failed.
A few others were trades that simply didn’t work, but don’t have lessons we can draw from them. Let’s talk about a trade that would have worked very well had I not missed it this week.
The One That Got Away
I’ve mentioned in the past that I have a curated “Market Watchers” list on X (formerly Twitter) I set up as a source of trade ideas. Checking it earlier this week, I saw this:
Upstart Holdings (UPST 0.00%↑) was trading at $35.50 then, and I was about to place an order to buy the at-the-market calls on it expiring on 12/15 at $1.15, or something like that. I was going to add it as a bonus trade in my 12/13 trade alert. I put it off until the next day, then got distracted with the MBI business, and by then the UPST had already moved. UPST ended the week at $44.52, meaning we could have made nearly 800% on those $35.50 calls. Sorry about missing that. I’ll pay more attention to my Market Watchers list going forward.