Limited upside seen for Dow Jones ETF

Chris McKhann (chris.mckhann@optionmonster.com)

The SPDR Dow Jones Industrial Average Fund has climbed back near its highs of two weeks ago, but one large position sees limited upside from here.

A trader has sold 10,000 May 151 calls for the bid price of $0.13 and bought the same number of the May 153 calls for the ask price of $0.05, according to optionMONSTER systems. The volume at each strike was multiples of the previous open interest at each strike, so this is new positioning.

The vertical spread takes in a credit of just $0.08, which will be the profit if the DIA remains below $151 through that expiration--a 91 percent probability, as suggested by the delta of these options. The maximum loss is capped, unlike a naked call sale, but would result in a $1.92 loss if shares are above $153 at that time. (See our Education section)

The DIA off fractionally on the day at $146.65. It bounced off support around $144 at the start of the week. The exchange-traded fund reached all-time highs when it topped $148 two weeks ago. 

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