I want to temporarily close the short leg of our Expedia (EXPE) bull put spread, as well as our Moderna (MRNA) and SPDR S&P Biotech ETF (XBI) puts ahead of today’s Federal Reserve announcement.
While the market seems to have priced in 75-basis-point rate increases in July and September and is rallying today, we could see a sharp downturn if this month’s rate hike is bigger than expected or if central bankers take an even more hawkish tone.
Therefore, I want to remove some risk by closing positions on some of our most volatile stocks. We will look to re-enter these positions after we see how the market reacts to the Fed’s comments.
Note that we are leaving the long EXPE put open, as it could be profitable if the stock crashes.
EXPE Jul Week Five (7/29) 88/83 Put Spread
Note: No action is needed on the EXPE Jul Week Five (7/29) 83 Put at this time.
Current Stock Price: $101.02
Net Debit: $5
Action: Buy to close the EXPE Jul Week Five (7/29) 88 Put for around $0.15, but adjust as needed to close toady
New Net Debit: $5.15
MRNA Jul Week Five (7/29) 150 Put
Current Stock Price: $ 156.27
Net Debit: $1.84
Action: Buy to close the MRNA Jul Week Five (7/29) 150 Put for around $1.45, but adjust as needed to close today
New Net Debit: $3.29
XBI Jul Week Five (7/29) 80 Put
Current Stock Price: $81.70
Net Debit: $11.74
Action: Buy to close the XBI Jul Week Five (7/29) 80 Put for around $0.85, but adjust as needed to close today
New Net Debit: $12.59