Options Trade – SPDR Dow Jones Industrial Average ETF (DIA)

Using the SPDR Dow Jones Industrial Average ETF  (DIA) as the underlying, I placed the following trade today:

• Bought: 5 DIA 204 strike price Puts that expire on July 22, 2017.
• Sold: 5 DIA 201 strike price Puts that expire on July 22, 2017.

*Premium Paid: $310.00

I don’t normally buy options, I usually sell them, but with valuations hitting record highs – and volatility hitting record lows – I am starting to buy some Put Debit Spreads.

You can’t fight the Market, just trade around what it provides.

I feel this is the best strategy right now because the Puts are cheap – and by doing a Put Debit Spread, I am buying the lower volatility options and selling the higher volatility options – taking advantage of the SKEW.

While trades like this do offer a slight hedge for some of my equity holdings, I am really trying to profit from the low volatility environment.  The max loss for this trade is the $310.00 I paid in premium, the max profit is $1,190.00.

*Excludes transaction costs.

Extra – have a great week-end: