Invesco Powershares QQQ (QQQ)

Lot 2023-1

Update 10/25/2023: I exited my short bear call vertical spread on QQQ, 24 days before expiration, for a $2.53 debit per contract/share, a profit before fees of $253 per contract. Shares were trading at $352.65, down $3.36 from the entry level.

The Implied Volatility Rank at exit was 46.9%, up 17.1 points from the entry level.

I exited on the 22nd day after entry because the position reached 50% of maximum potential profit, my normal exit point for options positions.

Shares fell by 0.9% over one day for a -16% annual rate. The options position produced a 100% return for a +1,659% annual rate.

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I have entered a bear call vertical spread on QQQ, using options that trade for the last time 45 days hence, on November 17. The premium is a $5.06 credit per contract share and the stock at the time of entry was priced at $356.01.

The Implied Volatility Ratio stood at 29.8%.

Premium:	$5.06	Expire OTM
QQQ-bear call spread	Strike	Odds	Delta
Calls
Long	378.00	78.0%	21
Break-even	369.06	69.0%	31
Short	364.00	60.0%	41

The premium is % of the width of spread. The profit zone covers a 3.7% move to the upside and an unlimited move to the downside.

The risk/reward ratio is 1.8 :1, with maximum risk of $894 and maximum reward of $506 per contract.

How I chose the trade. I selected the short strike prices based on the expected range of the expiration close, based on the options pricing, and then adjusted the strikes to coincide with the expected range based on Elliott Wave analysis.

By Tim Bovee, Portland, Oregon, October 3, 2023

Disclaimer

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.

License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at www.timbovee.com.