This trade could work for novices, since the midpoint pivot is so well situated and the impulse leg is strictly ‘kosher’ (and even a little gnarly). Stay tuned to the Trading Room if you’re keen to play, since I will try to make myself available for precise guidance if the trade triggers. The gist of it would be to buy a June 26 call at the lowest strike where they are trading for under $1. That would be around 266/267, but I can’t be sure until I’ve seen how things open Monday morning. There’s always the chance DIA will open on a gap, as it nearly always does, that is beneath the p=254.53 midpoint pivot where we intend to do our buying. You should attempt the trade with the DIA within 0.05 points or less of that number, but not if DIA has dropped below 254.43. ______ UPDATE (Jun 22, 8:34 p.m. EDT): I still like the trade, although not as much after enduring three days of gratuitous sideways shuffle at or below the green line. If p=254.82 is hit within the first hour of the regular session, do as recommended; otherwise, cancel all plans. ____ UPDATE (June 2, 9:01 p.m.): Tedium has taken its toll on the trade, and so we’ve canceled it. Better opportunities will surely come along _______ UPDATE (Jun 24, 7:46 p.m.): The breach of the 254.62 midpoint support was less than two points, but that’s sufficient to shift the burden of proof to bulls. An acceleration to the downside would put the 242.09 target shown in the chart in play. _______ UPDATE (Jun 25, 6:08 p.m.): A rally to x=260.88 would trip a ‘mechanical’ short via this pattern with a stop-loss at 267.14. This is NOT to be traded using put options, since the trade is not predicated on a downside reversal from 260.88. In fact, if it triggers and DIA noodles around for two weeks between 260.88 and C=267.14, below the stop, the position would remain ‘live’. That would of course grind down the value of any put options held. I doubt that things will play out that way and regard it as more likely that Friday’s high will generate a short-able top. Even so, I am suggesting that you play it by the book.
DIA – Dow Industrials ETF (Last:257.38)