Limited upside seen for Dow Jones ETF


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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