QQQ Options Trader Bets On a Bigger Tech Slump

QQQ put buying has been popular amid the broader technology sell-off

Jul 3, 2017 at 1:00 PM
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Tech stocks started the day off on a positive note, but have since resumed their recent trend lower. For instance, the PowerShares QQQ Trust (QQQ) was last seen trading down 0.7% at $136.73, after hitting a session peak of $138.43 right out of the gate. One QQQ options trader is betting on the technology slump to resume after the Fourth of July holiday, and downwardly revised their bearish put spread in the weekly 7/7 series.

Taking a quick step back, QQQ options volume is lower-than-usual in today's shortened session, but puts have taken a commanding lead over calls. With just a few minutes left in today's trading, around 271,000 puts and 133,000 calls have traded on QQQ.

Trade-Alert highlights a noteworthy roll down in the weekly series that expires at this Friday's close. Specifically, it looks as if one trader sold to close the weekly 7/7 135- and 138-strike put spread that was initially opened last Thursday when QQQ was trading near $138.50, and subsequently bought to open the weekly 7/7 133- and 137-strike put spread. If this is the case, the speculator is eyeing a move to $133 by week's end.

The skepticism among QQQ options traders isn't new, however. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the exchange-traded fund's (ETF) 50-day put/call volume ratio of 1.91 ranks in the 88th annual percentile, meaning puts have been bought to open over calls at a faster-than-usual clip in recent months. 

However, part of this put buying could be protective in nature, as those with long tech positions look to guard paper profits against the recent pullback. In fact, even with QQQ shares down 5.2% from their June 9 record high of $143.90, they are still maintaining a 15% year-to-date lead.

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