QQQ Analysis

PowerShares QQQ Trust Series 1 (QQQ)

Update 6/23/2017: QQQ declined slightly after entry and then returned to near the entry point. I rolled the position twice, each time gaining a bit more credit in order to make a profitable entrance, at 14.8% of maximum potential profit.

Shares rose by 0.9% over 10  days, or a +31% annual rate. The options positions produced a 17.35 yield on debit for a +633% annual rate.

QQQ at Monday’s close stood at a high level of implied volatility compared to its most recent trend. However, that metric has declined in trading on Tuesday, making QQQ less attractive. Even so, the IV multiple of the VIX still qualifies it for a closer look.

I shall use options that trade for the last time 10 days hence, on June 23.

Implied volatility stands at 15%, which is 1.4 times the VIX, a measure of the volatility of the S&P 500 index.

QQQ’s IV stands in the 34th percentile of its annual range and the 47th percentile of its most recent broad movement.

The price used for analysis was $140.09.

Premium: $2.09 Expire OTM  
QQQ-iron fly Strike Odds Delta
Long 144.00 92.8% 7
Break-even 142.09
Short 140.00 47.5% 53
Short 140.00 51.5% 47
Break-even 138.09
Long 136.00 83.5% 16

The premium is 52% of the width of the position’s wings.

The risk/reward ratio is 0.9:1.

Decision for My Account

I have entered an order on QQQ as described above. Using the odds of expiring out of the money metric, the put skew is extreme. The stock at the time of entry was priced at $140.08.

By Tim Bovee, Portland, Oregon, June 13, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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