$DIA – Dow Industrials ETF (Last:248.22)

I generally shun playing for crumbs at reversal points instead of riding the trends, but because many subscribers seem to prefer option trades that can be initiated for relatively small change, here’s a bottom-fishing play in DIA. Specifically, I’ll recommend buying two 7 Jun 250 calls with the underlying trading within a dime of the 246.12 target shown in the chart. The calls would be a decent buy for around 0.80, but you will be much better able to estimate their fair price by monitoring the bid/asked for them diligently as DIA falls toward the target. Do not pay up for them, and stop yourself out  if they trade for 30% less than you paid.  Alternatively, if you can swing it, buying the ETF itself would be preferable. Use a 246.16 bid, stop 245.99 for 200 shares. Take a profit on half if DIA rallies to 246.50, then set a break-even stop-loss for the remaining round lot.  Please note that using an alternative ‘A’ at 265.25 would yield a target at 247.68. That’s where the low could occur, but I am deliberately using the higher A to reduce risk. The tradeoff is that we could miss a good trade.