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DraftKings and Natural Gas: My Best and Worst Trades of 2023

By:Mike Butler

Looking back at 2023 and rating my best and worst options trade of the year

  • In 2023 I traded 121 distinct products, but two stood out as my best and worst trades of the year from a profit/loss standpoint.
  • DraftKings was my best profit/loss on the year, with a covered call position that I manipulated as the stock rallied from $11.66 to $39.35.
  • Natural gas futures contracts were my worst trades, primarily using short put spreads.

This year was a very volatile year of trading, even though the Volatility S&P 500 Index (VIX) only eclipsed $30 once in March and traded in the teens for most of the year after that. We saw the S&P 500 ETF (SPY) open at $384.37 and rally to a high of $475.89 just a few days ago.


We realized interest-rate hikes, massive moves on the consumer price Index (CPI) and producer price index (PPI) reports, and much more throughout the year. Now, it seems we're setting up for an interesting 2024 with the implied volatility of bitcoin during the ETF approval process and halving in April, and potential interest rate cuts as well.

The expected move based on current implied volatility in the S&P 500 Index (SPX) is +-$637.61 from the current market price of $4736. Come back to this article at the end of next year to see if we were inside or outside of that range.

DraftKings was my best trade of 2023

DraftKings (DKNG) is a trade I've been battling for a few years. It was initially my year-long trade in 2021, but it turned into a multi-year trade as I watched it go from $45 to $70, then back down to $10, and finally recovered this year to the high $30s.


At the start of 2023, I had 200 shares of DraftKings, and I was selling two calls against those shares. The goal was to continue reducing the cost basis on the shares and give myself a chance to get out of the trade for a positive profit/loss (P/L) much more quickly.

As the stock rallied from an opening print of $11.66 to $39.35, I made money back on the shares I owned, and I was offensively rolling covered calls to free up space for my shares to realize profitability.

Offensively rolling covered calls simply translates to rolling my short calls out in time, and up at the same time to lift my strike price higher and higher. I did this a handful of times, moving my initial short call strike price from $14 all the way up to $32 by the end of the trade.

Trading small in this product allowed me to take not 100 but 200 shares and hold the position until the stock finally recovered. I was fortunate to make back a lot of capital on this trade by staying in and putting time on my side, with help from the stock price recovering. Sometimes, as exemplified here, staying in a losing position and making back losses can be more powerful than having winning trades in a new position.

Natural gas was my worst trade of 2023

Natural gas futures products were my worst trades of 2023. It wasn't because I traded too large, or from any binary event. I just couldn't get anything right— and sometimes that happens. I primarily traded short put vertical spreads in natural gas futures (/NG), and I was trading static delta with a long contract in micro natural gas futures (/QG) which is a much smaller product.


As you can see from this chart, there were opportunities to get out of bullish positions if your entry point was high enough, but if your entry point was around $4.00 like me, it just never recovered.

We saw a shift in the fundamentals this year in Natural Gas as Thomas Westwater highlighted in a recent segment, and this put downside pressure on the price of natural gas. Sometimes, staying in a losing position and trying to "double down" and make back losses can result in a compounding of these losses.

As always, we learn from trading each year, and I'll be applying my experiences to my trading style to try to avoid mistakes, and replicate success in 2024.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb

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