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List of Partners vendors. The easiest and most cost-effective avenue to trade the Dow Jones is through an exchange-traded fund ETF. If you have limited capital but want to trade the Dow, DIA ETF options might be a good way to go, assuming you also understand the risks involved with options trading. Read on to see how to buy and use options to trade the Dow Jones. For the purposes of what follows, we will look at historical examples using DIA options that expired back on September Specifically, we focus on the following option strategies:. Note that the following examples do not take into account trading commissions, which can significantly add to the cost of a trade.

If you are bullish on the Dow, you could initiate a long position i. If you were instead bearish, you could initiate a long put position. In the example described above, you would be looking for the Dow to decline to at least 17, by option expiry, representing a 4.

Dow Jones Industrial Average Index Options

If you sold them at that price, you would break even, with the only cost incurred being the commissions paid to open and close the option position. The bull call spread is a vertical spread strategy that involves initiating a long position on a call option and a simultaneous short position on a call option with the same expiration but at a higher strike price. The objective of this strategy is to capitalize on a bullish view on the underlying security, but at a lower cost than an outright long call position.

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system.

These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. Visit performance for information about the performance numbers displayed above. More Articles 1. How to Trade the Dow Jones Index 2. How to Invest in Wheat, Soybeans and Corn. Step 1 Open an account with a registered commodity futures brokerage firm. Step 2 Download and install one of the trading platforms offered by the futures broker. Step 3 Study the trading platform user's manual or call the broker's trading support to learn how to access pricing of the Dow Jones futures and the options trading against those futures.

Step 4 Practice buying Dow futures options using the simulated trading account provided by your broker. Step 5 Start live trading Dow futures options once you are comfortable with the trading system and your results using the simulated account. The cost of an options contract will be the quoted price times the multiplier. Call options give the right to purchase the underlying futures contract at a specific exercise price, called the strike price. Put options give the right to sell the underlying futures at the strike price.

A purchased Dow futures option trade turns profitable when the futures price moves past the option strike price by more than the cost of the option.

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How To Buy Options On the Dow Jones

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