An Option Opportunity to Consider on Trumps Decision on Tariffs

Let me highlight an interesting option strategy for your consideration based on Trump announcing his decision on tariffs at the close of market today.

It is a Straddle. Here is a scenario of an options strategy  on the Diamonds, the DIA, which is the ETF for the Dow Jones Industrial Average.

I’ve taught the basics of the Straddle strategy in prior educational articles so let’s see what might have been had if one pursued a straddle on DIA going into today’s day of trade. Did the decision on riffs help this trade or not? 

Straddle Concept

A Straddle is where one buys to open an equal number of options contracts on a security with the same expiration date and same strike price.

In this case I will highlight the DIA and going into the close April 01, 2025, here is the pricing for an April 17, 2025, $420 Straddle: 

This is a trade designed to be a one-to-two-day trade. The decision on tariffs are to be announced 4pm US ET on Wed April 02.

One can do whatever expiration they want, but this is an idea to educate you on a strategy one can consider on a pending news event that one believes could move the market a decent amount higher or lower.

The cost on one contract of this straddle based on closing pricing from my software April 01 would be $12.70 or $1,270. (Buy to Open the $420 Call for $6.50 add to that the cost to Buy to Open a $420 Put for $6.20 = total cost $12.70).

You can see in the chart below where DIA closed and where it was one hour after the open and at that time the trade was pretty close to the same price; even after the gap down in DIA it had recovered – filled the gap down – an hour after the open.

Here is  a look at how things ended up on the day.

One can or could have closed the straddle for pretty much the same price, maybe  bit higher as DIA closed up a point higher today from the prior day.

OR

One can hold or still be holding it for the announcement at 4pm US ET April 02 and see how it moves the market what is now pre-market to the April 03 day of trade.

My intent would be to see if I could sell to close the Straddle for profit on the open April 03.

In the end if it doesn’t pop or drop significantly enough to profit,  break even is a win in comparison to taking a loss and we keep that capital to find other opportunities. Of course, if one rides this a bit longer to see if there is a significant enough of a price move to come in the coming days prior to the options expiration.

Patterns and Profits

I teach options education, I run multiple videos each week, where I give my overall market view, my sector specific insights and discuss potential stocks and ETF’s and crypto currencies.

I then break down for everyone where I see the security (stock , ETF or crypto) going in price and by when. Those are two very key pieces of info I assess in my options trading that help with my success.

I then educate people on my options analysis and process of deciding what options strategies are available and which one I would consider doing.

I do not offer the options as a recommendation, but as a means to educate you on the power and leverage of options and how you might consider taking on more of my education and alert services to improve your knowledge on how to trade options successfully!

If you want to learn from me my options trading process you can gain insights at my site Patterns and Profits.

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