DIA Nov11 120 P Speculative Trade

I put a speculative bullish trade on DIA 2 days ago. I sell to open 1 contract DIA Nov11 120 Put @ $1.00 before commission. My reasoning for the trade was based on 2 technical indicators signaling bullish trend in progress; uptrending RSI and uptrending stochastics. One concern at the entry was pre-market activities showed bearish momentum, but I proceeded with the bullish trade.

At close, DIA dropped a bit of 120, making my option position slightly in the red zone. The bullish prediction seemed to be wrong. I waited until the next trading session.

The following trade session was also bearish, taking my option deeper into the red zone. Now, I made another leg to repair that position. I decided to buy to open 2 contract of DIA Dec11 121 Put. The purpose of this leg is to cover the potential loss from the first position by generating another profitable trade from the long put. All these options forms a debit spread with different strike price and different expiration formation called Calendar Diagonal Spread.

So far, the scenario is working. I still need to carefully monitor these trades in the near term. Further adjustment to these positions are highly expected.


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