When the 
DJI was up 200pts this afternoon, I was skeptical it could stay that high so I started looking at DIA. I also have a bearish bias right now on the markets. I prefer options on DIA vs SPY because SPY options are wilder and more volatile. People using gamma and delta strategies make it harder for "simple" long option traders like me. I only trade this index when I have a strong setup.
DIA was around 365 and I saw this as a resistance area. I bought weekly 364 puts for a day trade and as I started creating this chart the index dropped fast. I have exited most of my puts and will close the rest today.
In general, you should have a consistent set of indicators/signs that you use with success. Then you can spot a good setup quickly. The charts show you what I saw. I am leaning bearish on the daily chart, and RSI supports my idea (reversal under 65 after dip below 33.33).
Daily stochastic gave a warning sign (red arrow), so after the strong reversal rally I am looking for price to move below the channel, back to 355. If you use 365 for a swing trade entry and the index continues up to the top of the channel, the stop losses would be between 365.20 and 366, so this is a low-risk options trade.
For today's trade I used the 30m and 5m charts. Many traders (me too) get stuck watching price action and forget to sell at identified targets. 362.80-362.50 was my range to exit puts, and I held some for more downside or to exit green before end of day.
*** As I post this, 363.50 is also a good swing put entry on 30m chart, but I would use a smaller position and hold through price swings.
DJI was up 200pts this afternoon, I was skeptical it could stay that high so I started looking at DIA. I also have a bearish bias right now on the markets. I prefer options on DIA vs SPY because SPY options are wilder and more volatile. People using gamma and delta strategies make it harder for "simple" long option traders like me. I only trade this index when I have a strong setup.DIA was around 365 and I saw this as a resistance area. I bought weekly 364 puts for a day trade and as I started creating this chart the index dropped fast. I have exited most of my puts and will close the rest today.
In general, you should have a consistent set of indicators/signs that you use with success. Then you can spot a good setup quickly. The charts show you what I saw. I am leaning bearish on the daily chart, and RSI supports my idea (reversal under 65 after dip below 33.33).
Daily stochastic gave a warning sign (red arrow), so after the strong reversal rally I am looking for price to move below the channel, back to 355. If you use 365 for a swing trade entry and the index continues up to the top of the channel, the stop losses would be between 365.20 and 366, so this is a low-risk options trade.
For today's trade I used the 30m and 5m charts. Many traders (me too) get stuck watching price action and forget to sell at identified targets. 362.80-362.50 was my range to exit puts, and I held some for more downside or to exit green before end of day.
*** As I post this, 363.50 is also a good swing put entry on 30m chart, but I would use a smaller position and hold through price swings.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.