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.
Tech Alert - Invesco QQQ Trust (QQQ) – BUY
BUY - Invesco QQQ Trust (QQQ) June 2021 $345-$350 in-the-money vertical BEAR put spread at $4.35
Opening Trade
6-4-2021
expiration date: June 18, 2021
Portfolio weighting: 10%
Number of Contracts = 22 contracts
This is a short-term bet that Invesco QQQ Trust (QQQ) will stay BELOW $345 in the next 14 days which means that even if the underlying stock goes slightly up from the current price, we will still make a profit.
We previously took profits on two similar looking QQQ put spreads and we are at it again but rolling up the strikes as the broader market adopts the bad news is a good news stance to the employment numbers.
This put spread balances out our 3 call spreads in CRM, GOOGL, and AMZN by cutting the risk.
Price action has been weak in tech lately and especially today when we opened strongly in the green only for the market to fade away in the afternoon.
It’s a worrying sign signaling that the Nasdaq hasn’t absorbed all the negative momentum yet and we won’t be making new all high time highs in the Nasdaq which ultimately is the genesis of this in-the-money bear put spread.
I still love the cash cow of tech like Google, Apple, Microsoft, and Facebook, but as a whole sector, tech appears to be fully priced as even sensational earnings haven’t been the catalyst to spur the next leg up.
I still love technology and they are the long-term difference makers in the economy, but the sector is in the process of being rerated.
If you don’t do options, avoid for now because this is a 14-day trade, but if you hold the ETF, keep it long-term.
Here are the specific trades you need to execute this position:
Buy 22 June 2021 (QQQ) $350 puts at………….………$15.20
Sell short 22 June 2021 (QQQ) $345 puts at………….$10.85
Net Cost:……………………..…….………..…..............….....$4.35
Potential Profit: $5 - $4.35 = $.65
(22 X 100 X $.65) = $1,430 or 14.94% in 14 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.
