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) May 2023 $335-$345 in-the-money vertical BEAR PUT spread at $9.20 or best
Opening Trade
5-1-2023
expiration date: May 19, 2023
Portfolio weighting: increase from 10%
Number of Contracts = 12 contracts
The pickings are pretty thin here with a Volatility Index ($VIX) at $15, an 18-month low. But it looks to go lower. The Mad Hedge Market Timing Index is approaching danger territory at 62.
Sorry the profit on this one is so small, but that’s all a Volatility Index ($VIX) gets you.
I think we are in for a market correction in May and that technology will lead on the downside once the next 25 basis point Fed rate increase is out of the way. This position will give you some position on your other existing long positions.
Look at the chart below and you will see we are now 9.00% above a flatlining 200-day moving average at $293.03, which is usually a good place to sell.
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 options put trades now, you get the benefit of low volatility and time decay over the coming month.
I don’t see any upside surprises on the horizon that could upset this position. Q1 earnings are about to be released and the early reports are coming in modestly better than expected.
I am therefore buying the Invesco QQQ Trust NASDAQ ETF (QQQ) February 2023 $335-$345 in-the-money vertical BEAR PUT spread at $9.00 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 $335.00 by the February 17 option expiration day in 19 trading days. If the market gets that high, you will think you have died and gone to heaven with your other positions.
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 May 2023 (QQQ) $345 puts at………….………$23.00
Sell short 12 May 2023 (QQQ) $335 puts at………….$13.80
Net Cost:………………………….....………..………….….....$9.20
Potential Profit: $10.00 - $9.20 = $0.80
(12 X 100 X $0.80) = $9.60 or 8.70% in 13 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.
