QQQ Options for Exposure to Technology Stocks

This looks like technology…right?

Here is the problem.  You love all of these technology stocks.  You love the FANG stocks (Facebook, Amazon, Netflix, and Google).  You have an iPhone so you love Apple.  You have been using a Windows computer forever so you love Microsoft.  You always wanted to drive an electric vehicle so you love Tesla. You see these companies as great long term plays because you think we are just going to create more and more machines to replace human jobs.  Not only will this allow these companies to make more money because of lower costs, but these companies will be right there creating these technologies.

And what’s more, you think Biotech companies could go crazy high too like Celgene or Amgen or Biogen, so you need to buy those too.  The problem is that you might not want to buy all of those individually and would love a way to buy them all at once…what do you do?

Powershares QQQ

Let’s talk a little bit about what the Powershares QQQ is to start with.  Remember those companies we mentioned earlier as stocks we wanted to buy?  Is QQQ the way to do it?

You bet it is.  We see all of the stocks on our wish list right here all fairly correlation to QQQ.  And the reason why? Because QQQ is the Nasdaq ETF.  If we want exposure to the technology or biotech space, we figure out the best way to get exposure to QQQ.  And because any day of the week we prefer options of stock, we suggest you get some exposure to QQQ options if you want to own these names.

QQQ Options

If we can get exposure to all of these heavy hitters all in one ETF…shouldn’t the options be amazing for us to trade?  It would make sense…if people want exposure to all of these names in one place they can buy QQQ.  And so many people want exposure to all of these names through QQQ, we bet there is a lot of not only competition but also institutional interest.  If this is all true we expect to see the following true about QQQ options:

1. Over a few thousand option contracts traded per day
2. Monthly and weekly expirations
3. Bid/ask spreads no more than a few pennies wide
4. Volume at the money in the hundreds
5. Open interest in the thousands

Let’s check it out.

Check.  That works for us.  If there are this many options traded there is clear demand from investors for as many expiration cycles as possible.  Do we see monthly and weekly QQQ options?

Check.  The market demands not only monthly but weekly and quarterly options and that is exactly what they get.  Next on our list…we should see very tight bid/ask spreads across the board here.

Winning.  We see bid/ask spreads that are no more than one or two pennies wide.  This allows not only investors and traders but market makers to be confident in filling any order at any size.  As a trader, we can look at these markets with full confidence that no matter what kind of trade we would like to make we will get filled at fair market value.

Check, check, and check.  Next up is trade volume for the strike prices at the money.  At the money means the strikes that are closest to the current price of the stock.  Right now with QQQ trading for $131.29, the at the money strikes would be the handful right around that price.

Another check mark.  And we also see that the open interest count is well in the tens of thousands, an example of institutional trading.

Here are some of the biggest trades of the day if you would like examples of institutions being active in QQQ options.

And what’s even better is that QQQ is not a crazy high priced stock which means we can trade uncovered options and are not limited to just covered options.  A short $130 put would only require $2,600 in margin buying power.

QQQ Options…Wrapping Up

Ask yourselves this…

Do you want to have exposure to names such as Facebook, Apple, Amazon, and Netflix?

If yes, get interested in QQQ.

Do you prefer trading options over trading stock (you REALLY should)?

If yes, get interested in QQQ options?

Do you like the following:

1. Over a few thousand option contracts traded per day
2. Monthly and weekly expirations
3. Bid/ask spreads no more than a few pennies wide
4. Volume at the money in the hundreds
5. Open interest in the thousands

If yes, start trading QQQ options right now!