DOW JONES debit spread play with good chance

10 mar 2021

I've opened a LONG CALL VERTICAL spread yesterday end of day for Dow Jones.

Correction maybe consolidated, I'm expecting some short squeeze soon.

Otherwise the probability of profit is godd, and the trade is manageable because of lower strikes.


(1) Relative Implied Volatility is low

I'm using my Relative implied volatility indicator to determine the credit/debit type of option trades.
Low relative implied volatility justifies debit option strategy (longing options) instead of creadit strategy (shorting options)




(2) Neutral RSI - no oversold or overbought

Uptrend still holding after a quick correction.
My Smooth RSI indicator is in no one's land.
There is plenty of room up and down.




(3) Observing other Down Jones instrument

Every Down Jones instrument pretty same indicator values for RSI and RIV too: DJI, YM, DJIA, DIA



CONCLUSION:

I'm using LONG CALL VERTICAL -

• Buy 1 DIA April16' 305 Call
• Sell 1 DIA April16' 310 Call

Debit call spread for 3.92 debit

• Probability of Profit: 67%
• Profit Target relative to my Buying Power: 26%
• Max profit: 105$
• Max loss at expiry: 395$ (Buy Power)
• Max loss with my risk management: ~120$
• Tasty IVR: 3.1
• Expiry: 38days

Stop/my risk management: Closing immediately if daily candle is closing below $309

Take profit strategy: I'm taking at the 55% of max.profit in this case with auto sell order. (at 4.55 debit)


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17 mar 2021

Trade chiuso: obiettivo raggiunto

Successfully closed today in 64$ profit, in 7 days.
Take profit target reached.
16% on my capital in one week.
I like trading indices..