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) April 2021 $340-$345 in-the-money vertical BEAR PUT spread at $4.30 or best
Opening Trade
3-15-2021
expiration date: April 16, 2021
Portfolio weighting: 10%
Number of Contracts = 24 contracts
It is clear that tech stocks and the bond market is joined at the hip. And with another 37-basis point to go before the ten-year US Treasury bond hits my 2.0% target, that means more downside in tech may be in store. Massive government borrowing is assuring we will get there sooner or later.
It is therefore prudent to hedge out some of the downside risks in my long stock holdings, especially in technology. After a meteoric move from March to August 2020, tech has been dead in the water. It now seems like capitulation is in order.
We’ve just seen a nice 23-point rally in the (QQQ), so this is not a bad entry point on the short side.
I am therefore buying the Invesco QQQ Trust NASDAQ ETF (QQQ) April 2021 $340-$345 in-the-money vertical BEAR PUT spread at $4.30 or best.
Don’t pay more than $4.70 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 $340.00 by the April 16 option expiration day in 24 trading days. If the market gets that high in 11 days, 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 24 April 2021 (QQQ) $345 puts at………….………$30.00
Sell short 24 April 2021 (QQQ) $335 puts at………….$25.70
Net Cost:……………......…………….………..………….….....$4.30
Potential Profit: $5.00 - $4.30 = $0.70
(24 X 100 X $0.70) = $1,680 or 16.27% in 24 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.
