Two weeks ago, I walked you through three protection-first trade ideas:’
- A healthcare diagonal on GILD
- An energy put spread on VLO
- And oil sector calls on XOM
These were setups to illustrate a methodology.
Protection first, growth second. Structures that survive market noise.
But here's what makes this valuable: tracking what would've happened.
Today? All three are underwater, and one is bleeding badly.
This is the part most market commentary skips. The follow-through. The reality check. The acknowledgment that even solid setups can turn against you.
Let me show you what happened and what the management decisions would look like.
The Two Week Results
Gilead (GILD): The diagonal spread idea started at $4.22 net debit. Today it's worth $3.29. Stock dropped from $123.21 to $119. Down, but the structure still functions. That short December 26 call? Worth $0.11 now. Nearly worthless. That’s not a bad thing. We’ll discuss why.
Valero (VLO): Disaster. The put credit spread idea collected $6.25. Today it's worth $13.46. Stock fell from $171.81 to $162. Below the $168.65 break-even. This is what a failed trade looks like.
ExxonMobil (XOM): Both call options down significantly. The $120 calls dropped from $4.40 to $2.15. The $125 calls fell from $2.30 to $0.95. Stock collapsed from $119.54 to $115.
Energy got absolutely crushed. Oil hit lows not seen since 2021. The sector that was improving fastest became the worst performer in a week.
What Changed
Oil prices broke $68. Then $66. Now sitting at levels that signal economic weakness, not just oversupply.
The market rotated hard out of energy. Remember that sector comparison chart? Energy had crossed seven sectors in six weeks to become fourth strongest. Last week, it gave all that back and then some.
VLO specifically got hammered. The stock that made higher highs through the oil decline suddenly couldn't hold support. Dropped straight through $170 with no pause.
Technology sold off too. But healthcare held up better than expected. GILD held support around $118, showing some resilience even in the downturn.
The GILD Management Decision
Here’s what I’m thinking about at this point for the GILD…
Buy back that December 26 call for $0.11. It's nearly worthless. Then roll it into January 2, collecting another $0.45 in premium depending on where the stock trades for a net credit of around $0.34.
After the roll, total cost drops from $4.22 to around $3.88 on a $6 wide spread. We can do this again the following week to the expiration for the 9th and then to the 16th. This buys us time and lowers the effective trade cost.
The structure is working exactly as designed. Down, but manageable. The diagonal gives you time and premium collection to reduce your cost basis.
Healthcare sector remains the strongest. Chart shows support held at $118.50. The next dividend comes in March.
This is a hold. The trade setup anticipated drawdowns. The structure handles them.
The VLO Problem
This one shows why protection matters even when you're wrong.
The idea collected $6.25. The spread is now worth $13.46. That's a $7.21 loss if closed today.
Maximum risk was $2,875 per spread. Current loss is about 25% of that max risk.
VLO is at $162. Break-even sits at $168.65. Short strike at $175. Long protection at $140.
Chart shows support at $160. If that holds, time decay still works in favor. Every day both options lose value, but the short $175 put loses faster.
31 days to expiration. That's enough time for either a bounce back to $168 or for time decay to reduce the spread value significantly.
If I'd taken this trade, I wouldn't close yet. But I'd be watching $160 like a hawk. Break below that, and it's time to make a decision about taking the loss or adjusting.
The XOM Reality
This one's straightforward. Wrong direction, defined risk, decision time.
The $120 calls started at $3.77. They're worth $2.15 now. Down 43%. The stock needs to get back above $117 just to stop the bleeding.
The $125 calls started at $1.95. They're worth $0.95. Down 51%. These need an even bigger recovery.
Oil hit $66. Energy sector is oversold on monthly timeframes but still showing weakness on weekly and daily charts.
Here's the conflict: Energy looks oversold long-term. But short-term momentum is down. The monkey bars show disagreement between timeframes. Month says oversold. Week says overbought. Day says wait.
If I'd taken this trade, I'd give it until end of week. If oil can't hold $66 and energy can't reclaim support at $45 on XLE, I'd close both positions for whatever recovery I could get.
February expiration gives time. But holding through continued weakness just because you have time left? That's hoping, not trading.
What the Market Is Telling Us Now
Technology broke support at $142.93 on XLK. Monthly monkey bars showed fair price, but closing below that level signals more downside potential to $136. That's another 3% drop back to November lows.
Basic materials touched overbought last week at $45.60. Pulled back to fair price at $44.78. This is actually setting up for the next bullish move if it holds above $44.36. The gap up, close down pattern on Friday showed exhaustion, but the longer-term setup remains intact.
Healthcare continues to hold relative strength. That's why GILD, despite being down, isn't broken. The sector support is still there. XLV gapped up after the Fed announcement and held those gains.
Energy gave back everything. From fourth strongest to worst performer. The improvement I showed you two weeks ago? Completely erased in five trading days.
The Real Lesson Here
Tracking these trades matters, even if you don’t take them.
It shows the methodology works even when individual trades don't. The GILD diagonal structure? Down, but manageable. The roll mechanism provides a path to profitability even from here.
The VLO spread? Maximum loss is defined. $2,875. Painful, but not portfolio-ending when sized correctly.
The XOM calls? Risk was $3.77 and $1.95 per contract. Known from the start. The decision now is whether to hold for a bounce or cut the loss.
This is real trading analysis. Not every setup works. Even strong fundamentals, technical confirmation, and defined risk don't guarantee profits.
What they do guarantee: you know your risk. You have time to make decisions. You don't get wiped out by one bad week.
What Matters This Week
If I'd taken the GILD trade, I'd be rolling that December short call to January. Collecting more premium. Reducing cost basis. Holding the position because the structure and sector support both remain intact.
If I'd taken the VLO trade, I'd be watching $160 support. Hold through Wednesday, keep the position. Break below $160, look at adjustments or take the loss.
If I'd taken the XOM trades, I'd give them until Friday. If energy can't show strength by end of week, close both positions. Don't hold losing trades just because time remains.
For new setups, I'm not adding energy exposure here. I'm watching basic materials at $44.78 for support before considering that sector. Looking at technology shorts if we close below $142.93 again. Healthcare still looks strongest for bullish plays.
The Forward View
We're heading into year-end. Tax loss harvesting is real. The technology sell-off from fair price suggests more downside is possible.
Energy at $66 oil with the sector oversold on monthly timeframes? Eventually that's a buy. But timing matters. Right now weekly and daily timeframes say wait.
Basic materials pulling back to fair price at the end of a bullish move? That's often where the next leg higher starts. But it needs to hold $44.36 to confirm.
Healthcare holding strength while everything else rotates? That's where I'd look for the next bullish trade idea when the setup appears.
I'll continue to track these ideas. You'll see what the GILD roll would accomplish, what happens with VLO at $160, and whether holding or cutting XOM makes sense.
This is what real market analysis looks like. Not every idea works. But every idea gets tracked. Every decision gets explained. Every result gets shown.
Because that's how you actually learn to trade.
Blake Young
Senior Market Strategist, TheoTrade