Playing Small Ball

Is it Tuesday? Check. Are the equity markets green? Check. All is right with the world. The economic data are light this week, even if words from the Fed are not. It's light on the earnings front too, but I have an interest in trading some smaller names before and after the reports, although on a small scale.

Diana Shipping (DSX) Source: View Chart » View in New Window »

First up is Diana Shipping (DSX), which used to be a momentum traders dream along with several other shippers. If you remember those days, then you also remember what a red Tuesday looks like, but I digress. There is a good amount of call buying today. I can see why, with the stock having successfully tested support it looks ready to power higher. This hasn't been a huge mover around earnings, but the potential is there. The short-term downside may be capped around $10, but I do want to play the upside as well. I am buying a July 11 call and shorting a June 12 call for a diagonal call spread. Then I am buying 1x July 10 put and shorting 2x June $10 puts. The total cost here is around $0.50 with my targets being around $10 or pushing up towards $12....190 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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