Exits, 3/2/2024
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
Marathon Digital (MARA 0.00%↑). Bought at $25 as part of our core strategy on 2/20/2024; got stopped out at $29.02 on 2/29/2024. Profit: 16%.
Options Trades
Call spread on Marathon Digital (MARA 3.69%↑). Entered at a net debit of $0.11 on 2/27/2024; expired worthless on 3/1/2024. Loss: 100%.
Call spread on Snowflake (SNOW -0.86%↓). Entered at a net debit of $1.05 on 2/28/2024; expired worthless on 3/1/2024. Loss: 100%.
Call spread on Autodesk (ADSK -6.84%↓). Entered at a net debit of $1.15 on 2/29/2024; expired worthless on 3/1/2024.
Put spread on Macy’s (M -2.56%↓). Entered at a net debit of $0.23 on 2/26/2024; exited at a net credit of $0.27 on 2/28/2024. Profit: 17%.
Put spread on Warby Parker (WRBY -0.47%↓). Entered at a net debit of $1.15 on 2/27/2024; exited at a net credit of $1.88 on 2/29/2024. Profit: 63%.
Put spread on Keurig Dr. Pepper (KDP 0.00%↑). Entered at a net debit of $0.40 on 2/20/2024; exited at a net credit of $0.73 on 2/26/2024. Profit: 83%.
Put spread on Urban Outfitters (URBN 0.40%↑). Entered at a net debit of $0.46 on 2/27/2024; exited at a net credit of $0.94 on 2/28/2024. Profit: 104%.
Comments
Stocks or Exchange Traded Products
Our core strategy continues to do well; as I noted in our Top Names post on Thursday, our top ten names from August 24th were up 62.22%, on average, over the next six months.
Options Trades
One of the three 100% losses was due to me being greedy. I had an opportunity to exit the Marathon Digital (MARA 3.69%↑) call spread for a ~100% gain before it released earnings, but I held for a chance at a 300% gain.
Another 100% loss, the put spread on Autodesk (ADSK -6.84%↓), raises a question about our composite score that I’m going to crunch the numbers on this weekend. ADSK had a composite score of -0.4, where I’d normally want to see one closer to -1 or more negative to bet against a company, but I rationalized betting against a -0.4 and lost money on it. The question this raises, though, is what should be the composite score cutoff for a bullish bet or a bearish bet? Another example was Arlo Technologies (ARLO 0.00%↑), which I passed on, and which had a composite score of 2.5. That ended up being one of the best performers this week, up 35.05%.
Should we bet on all stocks with 2.5 or better composite scores next time? I’ll run the numbers this weekend and see what the data shows.
I also missed out on 100%+ gain on Elastic (ESTC 0.18%↑). I tried buying the $135 strike puts and selling the $130 strike puts but didn’t get a fill. In hindsight, though, the implied move was about $10, so I could have tried a $130-$125 put spread instead. That would have led to a >100% gain, as ESTC closed at $117.01 on Friday.
Our composite score continues to do a good job of clarifying competing signals. Consider, for example, Urban Outfitters (URBN 0.00%↑), which had a composite score of -2.6, despite having bullish social data and options sentiment scores.
Urban Outfitters (URBN) (-2.6)
Social data: +35
PA Options sentiment: Very Bullish.
Setup rating: 2
Valuation rating: 7
F-Score: 8
Recent insider transaction(s): Net open market sales, peaking last March.
Zacks ESP: 0%
Zacks Ranking: 2
RSI: 49
Short Interest: 6.51%
That ended up being our best exit of the week.
As usually, we’ll feed the data from this week into our spreadsheet, crunch the numbers, and apply our updated weightings to our ten metrics for the next batch of earnings trades. What will be different starting this weekend, is we’ll also do the same with our composite scores, to figure out minimum scores for bullish bets, and maximum scores for bearish bets.
Looking forward to next week.