With the VIX sub-15 again, confidence that the market will continue to go higher is growing. The DIA is up 11% in the first two months of the year, which would ordinarily be great for a full year. But these days, bulls aren’t happy unless they get higher returns, particularly on news that the economy grew more than expected in Q4 and that Trump and Kim are still pals despite The Donald walking away from negotiations. Bears, on the other hand, would be happy with even a little sell off. DIA tried to deliver being down the past three days in a row, which gives contrarian bears some encouragement. Maybe, just maybe, the DIA will see that there’s more risk to the downside at this point, and sell off a bit more. If you are bearish on DIA, the long put vertical that short the 255 put and long the 265 put in the April expiration with 48 DTE is a bearish strategy that has a 60% prob of making 50% of its max profit before expiry and that generates $1.20 of positive daily theta.
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