TNT Trades Blog
Trading the Market with $DIA
The $DIA is the ETF that tracks the Dow Jones Industrial Average (SPDR). The ETF price is 1/100th the Price of the DJIA. This makes it very interesting to be able to control a market driven ETF, like the DIA, with much less capital. Some may say that a $242 ETF is still expensive and […]
The $DIA is the ETF that tracks the Dow Jones Industrial Average (SPDR). The ETF price is 1/100th the Price of the DJIA. This makes it very interesting to be able to control a market driven ETF, like the DIA, with much less capital. Some may say that a $242 ETF is still expensive and we agree…that is why we use options that can control this ETF at a fraction of the cost.
In our TNT and TNT Pro option trading services we analyzed the DIA price action vs the 200 Day Simple Moving Average. In our webinar we discussed the potential price action and what could happen in the overall market with as the ETF went above and below this moving average. In the past 3 years there have only been a hand full of days that the ETF has traded below the the 200 SMA. In fact the last time it closed below the 200 SMA was in June of 2016 and February of 2016 before that. So we have spent a nice period of time since then above the 200 SMA. So this level becomes an interesting mind set for investors especially those who use this moving average as a long term indicator. In fact the last two times it fell below it quickly rallied to close above the moving average to close to not trigger a sell signal in the overall market.
So on our Tuesday 9AM webinar we analyzed the DIA as it broke above the 200 Day SMA($242.87). The day before the DIA went below the 200 SMA ($242.75) and went to a low of $240.43 and rallied all the way back $242.31. So the analysis was to play the momentum as in either direction…either above or below the 200 SMA. As Tuesday unfolds, there isn’t much price action, it goes up a little but basically closes unchanged on the day. Wednesday gives a much better opportunity for momentum. The DIA opens at $243.27 which is above the $242.97 200 SMA and proceeds to trade up to $245.57.
At 10:29AM (EST) with the price at $244.75 we emailed subscribers to let them know we would be rolling from a slightly in the money option to a ATM or OTM option to lock in profit. The stock proceeded to run up to $245.58.
The ETF then proceeded to drop the rest of the day (image below) to close at $241.10.
DIA call buyers reports profits of 60-67% because of the roll and locking in the profit.
Paul K locked in 60%ROI, Walter locked in 60% ROI and Morgan G. locked in 67%.
Congrats to our subscribers on this great trade.
