Exits, 6/16/2023

How we did on the trades we exited this week.

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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

1. Calls on Sportsman’s Warehouse ( SPWH 5.77%↑). Entered at $0.60, as noted here. Exited at $0.05. Loss: 92%

2. Put spread on Stitch Fix (SFIX 12.87%↑). Entered at a net debit of $0.90, as noted here. Will expire worthless. Loss: 100%

3. Put spread on Dave & Buster’s (PLAY 10.05%↑). Entered at a net debit of $0.90, as noted here. Will expire worthless. Loss: 100%

4. Put spread on Lovesac (LOVE 7.13%↑). Entered at a net debit of $0.90, as noted here. Will expire worthless. Loss: 100%

5. Put spread on Designer Brands Inc. (DBI 5.94%↑). Entered at a net debit of $0.18, as noted here. Will expire worthless. Loss: 100%

6. Put spread on NIO Inc. (NIO 1.42%↑). Entered at a net debit of $0.61 as noted here. Will expire worthless. Loss: 100%

7. Other put spread on NIO Inc. (NIO 1.42%↑). Entered at a net debit of $0.44, as noted here. Will expire worthless. Loss: 100%

Comments

There’s a scene in the Vietnam War movie We Were Soldiers (2002) where an American soldier accidentally calls in a napalm strike on his own men. Most war movies are anti-war movies, but this one wasn’t. It was based on the book We Were Soldiers Once...and Young by Lieutenant General Hal Moore and Joseph Galloway, about the first big battle between the U.S. Army and the North Vietnamese Army in Vietnam, Ia Drang.

In a typical war movie, this disaster would be dwelled on, and portrayed as emblematic of the futility of war, but the scene plays differently here. Mel Gibson, playing then-Lieutenant Colonel Hal Moore, tells the soldier (Charlie) to “forget about that one” and “keep them coming”.

The metaphor here should be obvious, but if it’s not, the American troops who got napalmed are my money—and yours, if you entered these options trades too. I am Charlie, the soldier who caused the disaster. But I am also Hal Moore, telling myself to forget about it and move on. But before I do, let’s examine what happened.

These were all earnings trades based primarily on social data, but we looked at fundamental and technical data on the stocks as well for confirmation. Social data has a fifty-something percent success rate on earnings trades, an edge significant enough that hedge funds pay a lot of money for the data. We didn’t enter any new earnings trades this week, as the firm we use for social data only had one trade, and it was one where Zacks’ Earnings Surprise Prediction pointed in the opposite direction (in the end, the results were mixed). But given a >50% success rate with social data, and the losses we took this week, we should be do for some wins with it.

On The Underlying Stock Side

On the stock side, another week with no exits is good news, as it means I didn’t get stopped out of any of my current holdings. Our core strategy of buying the Portfolio Armor website’s top ten names and replacing one with a current top name when it gets stopped out continues to perform well. Here’s a look at the performance so far of our top ten names from four months ago.