QQQ Options Trading is one of the freshest trading concepts to hit the markets. Traders who are new to this concept and seek exposure to NASDAQ 100 stocks can read all about QQQ Options Trading in this article.
What is QQQ Options Trading?
QQQ Options Trading involves buying long (or “bullish”) options with the intention of striking it big when the market opens up. It is a contract between two parties that guarantees (or protects) the buyer a certain price (set in the deal) for a set date sometime in the future. Aside from being the most prevalent Exchange Trading Fund (ETF), QQQ is the second most traded one as well.
Benefits of QQQ ETF Options
Listed below are some key benefits of using QQQ ETF Options:
- Trade volumes are high
- “Positive gain” opportunities are present in large numbers
- You have the flexibility to use QQQ trading strategies with multiple expirations/strikes for calls and puts
- QQQ ETF Options are tax efficient
- Pricing is always transparent
- Transaction fees are usually low
QQQ Options Trading Tips
Following are some useful tips for effective QQQ Options Trading:
- Determine how much you’re willing to pay for an option, which is called the strike price.
- Determine what type of market you’re trading in.
- Make sure that you’re betting on an asset that is strong. Stronger assets tend to have more leverage and will allow you to earn bigger profits in less time. If you are new to option trading, you should focus on cheap stocks that have low price to book ratios. These will help you generate a lot of profits in less time and they’ll also allow you to enjoy the process of trading as well.
QQQ Options Trading System Checklist
- The strike price selected by you should have 1000 as the minimum open interest
- Choose the expiration dates for weekly and monthly time periods
- A minimum of $0.35 should be the option premium
- For weekly options, the QQQ option delta should range from 0.40 to 0.60. For monthly, the delta should be 0.50
- For weekly options, the Bid/Ask spread should be under $0.06, and for monthly, up to $0.10
So, now that you understand what is QQQ options trading, it’s time to put it to work. Try using multiple strategies in a day to increase your chances of making a profit. For learning the most widely practiced trading methods and making profitable investments, become a member of the Rich Picks Daily trading club today.