Stock / Symbol: SPDR DOW Jones Industrial Avg ETF / DIA
Option Strategy: [private_monthly]double calendar[/private_monthly]
Price at trade post: $152.6
Reasoning: Looking to play both sides of this market, I'm putting on a [private_monthly]double calendar on DIA[/private_monthly] using weekly options for the short options. This is a delta neutral trade with a delta of -5.6, a positive theta of 7.9 and a positive vega of 84. With volatility very low, I'm using a [private_monthly]calendar [/private_monthly]which will benefit should volatility increase. [private_monthly]If DIA trades up over $154, I'll likely take the profits there on the call calendar and then play for a pullback in DIA. If DIA quickly trades down to $151, we'll take profits on the put calendar and then play for a rebound in DIA.[/private_monthly]
Trade Details:[private_monthly]
BTO 2 DIA Jul13 154 calls
STO -2 DIA MayWk4 154 calls
BTO 2 DIA Jul13 151 puts
STO -2 DIA MayWk4 151 puts
for a max net debit of $3.80 per contract (day order, limit order). The mid is currently at $3.75. If not filled today, it's ok to try again Monday.
Requirements:
Cost/Proceeds $750
Option Requirement $0
Total Requirements $750
Estimated Commission $12
Max Risk: $750
Max Reward: $50 or 6.5% (at current volatility level) at $151 or $154 by May 24
Profit Range: 150.50 to 154.25 by May 24
Suggested Upside stop: @ $154.25
Suggested Downside stop: @ $150.50
[/private_monthly]
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