Ooh, it’s getting scary out there. Sure, the DIA is still up over 9% for the year despite a rare gap lower yesterday morning. But the whole China thing plus the collapse in the 10-year yield and the lowest PMI in 10 years are signaling a slower economy. Even short interest in SPY shares is the highest in 4 years. That should be making the market nervous, but the VIX couldn’t close above 18 and the DIA even rallied back in the last hour of trading yesterday. So, will the sell off continue or not? That’s anybody’s guess, but you might be bearish on DIA if you think it still has some more room to the downside on the inevitable next piece of scary news. If you are bearish on DIA, the long put vertical that’s short the 254 put and long the 256 put in the July weekly expiration with 42 DTE is a bearish strategy with a 63% prob of making 50% of its max profit before expiry and that generates $.23 of positive daily theta.
Opened 19/05/24 for $.75 debit
Closed 19/05/29 for $1.08 credit