DIA – Dow Industrials ETF (Last:167.90)

I’m tracking four Oct 10 167/169 put spreads for a 0.05 CREDIT, based on subscriber feedback left in the chat room. Traders were able to leg on this position at very favorable prices using a rally target at 171.10 sent out Monday night. It precisely nailed an intraday peak on Tuesday at 171.10, triggering a recommendation to buy the 169-strike puts, and then to spread them off yesterday morning by shorting 167-strike puts after DIA had fallen sharply. We’ll put the position on autopilot for now, since it cannot lose — will in fact produce a profit of $20 no matter what DA does, but with potential to serve up an $820 gain if DIA is trading below 167 come next Friday. For your interest, and to help you determine whether you could have followed my instructions, here is the recommendation exactly as it went out: “We’ll monitor this vehicle more closely for low-risk shorting opportunities in the days ahead. Let’s warm up with an order to buy four Oct 10 169 puts if and when DIA gets within 0.04 of the 171.10 target shown. I estimate that the puts will be trading for around  0.75 then, but you can refine the bid as warranted by training on the bid/asked when DIA gets to 170.90.  We’ll risk a theroretical $80 on this one, stopping ourselves out of the puts if they trade 0.20 below where bought.”  _______ UPDATE (October 6, 2014): Friday’s short squeeze has gutted the spread, but it could have been cashed out for two thirds of its maximum potential value last week when DIA briefly dipped below 167 to a low of 166.43.  Reports, anyone?