When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (QQQ) - BUY
BUY the Invesco QQQ Trust NASDAQ ETF (QQQ) February 2023 $300-$10 in-the-money vertical BEAR PUT spread at $9.20 or best
Opening Trade
1-17-2023
expiration date: February 17, 2023
Portfolio weighting: increase from 10%
Number of Contracts = 12 contracts
The pickings are pretty thin here with a Volatility Index at $18.
So far, the stock market has gone up almost every day this year. But I think we are in for a market correction in January and February and that technology will lead on the downside.
Look at the chart below and you will see an almost perfect “head and shoulders top” setting up. You also get major resistance at the descending 200-day moving average at $294.17.
Tech stocks now have the kiss of death on them and are still expensive relative to the S&P 500 (SPY). That makes them a great short.
Technology will eventually recover in the second half of the year but will have to test lower lows first.
The (QQQ) is the favorite proxy for tech stocks. Its five largest holdings are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), NVIDIA (NVDA), and Alphabet (GOOG). To learn more about the (QQQ), please click here.
By taking on an options put trade now, you get the benefit of low volatility and time decay over the extended holiday period. There is no point in passing up a sweet trade just because some guy with a white beard in a red suit is about the descend down the chimney.
And let me tell you, starting out the New Year with a big profit in your trading account is the way to go. It lets you trade from a position of strength for the rest of the year.
I don’t see any upside surprises on the horizon that could upset this position. Q4 earnings are about to be released and the sense of foreboding too palpable. We also get an assist from the 200-day moving average, which should provide major upside resistance.
I am therefore buying the Invesco QQQ Trust NASDAQ ETF (QQQ) February 2023 $300-$310 in-the-money vertical BEAR PUT spread at $9.20 or best.
Don’t pay more than $9.40 or you’ll be chasing.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
This is a bet that the Invesco QQQ Trust NASDAQ ETF S&P 500 (QQQ) will not trade above $300.00 by the February 17 option expiration day in 23 trading days. If the market gets that high, you will think you have died and gone to heaven.
If you don’t do options, stand aside. This is a very short-term options expiration play only.
Here are the specific trades you need to execute this position:
Buy 12 February 2023 (QQQ) $310 puts at………….….……$30.00
Sell short 12 February 2023 (QQQ) $300 puts at………….$20.80
Net Cost:………………………….………..……..............…….….....$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(12 X 100 X $0.80) = $960 or 8.70% in 23 trading days.
If you are uncertain on how to execute an options spread, please watch my training video by clicking here.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
