On Tuesday, the Dow Jones Industrial ?Average (DJIA) reached a record intraday high of 15,056.67.?For the day it was up?87.31 points to close at 15,056.20 as 23 of its 30 components increased.?
The record activity came on a few factors including?Australia’s cut in its refinancing rate while the U.S. companies, DirecTV and Fossil Inc., reported positive quarterly earnings.
Earlier in the trading day, an option trader showed his sentiment toward the rising Dow by putting on an??iron condor? trade to show his belief the index would stay in its range over the next seven weeks, reported The Wall Street Journal’s Kaitlyn Kiernan.?
On the day, the largest SPDR Dow Jones Industrial Average ETF (DIA) options trade was a complex four-legged strategy betting the $12 billion fund will stay within a $15 price range until mid-June.
The trade looks for this ETF to remain between $139 and $154 until its June 22 expiration or 2.5% above and 7.5% below its current $150.22 price to make this a viable trade, added Kiernan.?
Randy Frederick, managing director of active trading and derivatives at Charles Schwab, explained via The Wall Street Journal,??An iron condor is typically designed to be a neutral, low, low risk strategy. Losses are limited, that?s the nice side of it.?
For this trade, the options?trader sold June put options connected to the $139 level for the Dow fund and June $154 call options, while purchasing June $137 puts and June $156 calls.
On Feb. 26, this Dow ETF finished under $139 but it has never moved to a $154 level.