TheOptionPlayer.com sets up a PowerShares Nasdaq 100 ETF (NasdaqGM: QQQ) short-term (23-day) option strategy (based on Wednesday’s closing quoted bid/ask mean)
Investors could simultaneously:
The difference between funds received and paid out is a $.31 per share credit which we keep if the Powershares Nasdaq 100 ETF closes above $137 on Friday July 21st but execute a trade adjustment if it appears the price will end up lower. If the price gaps lower open the trade using lower strike prices. See Guidelines page at www.theoptionplayer.com/ for explanation on how trade is set up.
Why we recommend it:
As seen in the chart below, the PowersShares Nasdaq 100 ETF (QQQ) appears to be setting up a trading range. Technical signals indicate neutral near-term momentum for the QQQ ETF and already the price is starting to bounce off a support level. Technology stocks were grossly oversold the past few days and are due for a recovery. The end of June and July are in the midst of the slowest consecutive months for trading activity, therefore it is reasonable to expect the QQQ ETF to continue moving sideways. There is a high probability the QQQ ETF won’t break below the target price at the July monthly option expiration date. Actually this an extremely low risk trade we are using to hedge a current Powershares Nasdaq ETF (QQQ) position.
52-Week High: $143.57
52-Week Low: $102.22