PowerShares QQQ Trust (QQQ) Put Options Popular as Trump Takes Aim at Tech Stocks

Put options are active on QQQ as the fund retraces some gains on reports of an executive order aimed at Silicon Valley

Jan 30, 2017 at 3:35 PM
facebook X logo linkedin

PowerShares QQQ Trust (NASDAQ:QQQ) has been trending higher with the rest of the stock market -- tracking a breakout in its basis Nasdaq-100 Index (NDX) -- but today, QQQ shares are down as news from Washington, D.C., strikes tech stocks. Reportedly, one of President Trump's next executive orders could force tech companies to revamp their hiring processes. Though the order has not yet been finalized, QQQ is trading lower today as some key NDX components are feeling the pressure.

Since the U.S. presidential election, the ETF has gained 6%, and managed to break through the $120 mark in mid-December, which had previously served as resistance. Several pullbacks in late 2016 were contained by QQQ's 126-day (half-year) moving average, and on Friday, the ETF touched a record high of $125.92.

However, QQQ is down 1.3% at $124.19 today. Among the notable NDX names moving lower, FANG stock Alphabet Inc (NASDAQ:GOOGL) is down 2.5%, NVIDIA Corporation (NASDAQ:NVDA) is off 1.8%, and Apple Inc. (NASDAQ:AAPL) has shed 0.6% ahead of tomorrow night's earnings.


In the option pits, QQQ puts are outpacing calls today, with 205,000 puts traded so far, compared to 119,000 calls. There has been notable volume at QQQ's weekly 2/3 123-strike put, along with a block of 8,100 weekly 2/3 121-strike puts that appear to have been bought to open at the ask price of $0.11 each. These option buyers are anticipating that QQQ will continue today's downtrend to fall below the strike price prior to Friday's closing bell, when the weekly options are due to expire (although some of this put activity could be attributable to investors hedging their long equity bets).

A plunge of this magnitude would require QQQ to breach several layers of technical support, but the short-term path higher for the shares isn't exactly clear. QQQ's leading open interest position is the front-month February 125 call, with nearly 99,000 contracts outstanding. During the days ahead, the heavy open interest at this strike could translate into options-related resistance for the ETF.  That said, options players have seemed generally uninterested in QQQ contracts lately, with the fund's total open interest of 2.85 million calls and puts ranking below 98% of other such readings from the past year, per Trade-Alert

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!


Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.

Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!