Options Trading News

December 21, 2012  Fri 11:10 AM CT

The SPDR Dow Jones Industrial Average Fund doesn't usually see much option action, but today it is the target of a large call sale.

More than 52,000 DIA options have traded in total, compared to a daily average of around 35,000. optionMONSTER systems show that a trader sold 10,920 January 133 calls for the bid price of $1.52 against previous open interest of 7,550 contracts, so this is a new position.

The call selling isn't tied to any trading in the underlying shares that we can see today, but it is likley they they were traded against a previously established long position. That would create a covered call strategy, which would be bullish up to the $133 strike price but not beyond. (See our Education section)

The DIA is down 1.23 percent to $131.14 in early afternoon trading. The exchange-traded fund bounced off support at $125 a month ago and tested resistance around $134 earlier this week.
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As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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