Stock / Symbol: SPDR Dow Jones Industrial Average / DIA
Option Strategy: [private_monthly]double diagonal[/private_monthly];
Price at trade post: $174.67
Reasoning: Between now and the expiration of the FebWk1 options, the standard deviation calculation for DIA puts it in a trading range between [private_monthly]167 to 182. I'm going to use a Double Diagonal[/private_monthly] which has a delta of 1.2, a positive theta of 3.4 and a positive vega of 22.9. [private_monthly]If DIA either trades up to $183 or down to $165, we'll either exit the trade or adjust the position.[/private_monthly] The goal is to exit the trade where were up approximately 15%.
Trade Details:[private_monthly]
BTO 2 DIA Mar15 184 calls
BTO 2 DIA Mar15 164 puts
STO -2 DIA FebWk1 183 calls
STO -2 DIA FebWk1 165 puts
for a max net debit of $1.75 per contract (GTC order, limit order). Try to get filled near the mid, currently at 1.65.
Requirements:
Cost/Proceeds $350
Total Requirements $550
Estimated Commission $12
[/private_monthly]
Max Risk: $550
Max Reward: $375 or 68% [private_monthly]between at $165 by Feb 6th
Profit Range: $160 to $173 & $178.50 to $185 by Feb 6th
Suggested Upside stop: @ $183
Suggested Downside stop: @ $165
[/private_monthly]
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