I keep a close eye on QQQ and just spotted an example of a great potential trade. Below I show what my indicator revealed, the trade example to consider and an update on a previous trade.
QQQ, which tracks the tech heavy NASDAQ index, is one of the most active ETFs in the market. Since it trades in such high volume it offers unique characteristics that make it more ideal for options trading.
When I look for a potential trade in QQQ I start with the recent activity in the NASDAQ. Here is an image that makes it easy to see.
This chart image is courtesy of FINVIZ.com a free website and gives a quick view of each day’s movement.
The next step for me is to look at a chart of QQQ that includes Fibonacci Exponential Moving Averages (EMA). This is an indicator that appears on the chart in colored lines and gives us a sense of the strength and direction of the current price movement. To learn more about EMAs, click here.
Since the EMA weights recent price activity greater than older price activity, it can block out some of the noise and provide a signal based on more current activity.
EMAs are also helpful in providing actionable price targets to help build trades.
In this example, if price rose to $369 you could consider a call trade. $390.00 is the short-term target.
I mentioned earlier that the higher volume of QQQ lends itself to options trades. Options also provide another advantage in that they offer leverage and risk control. To buy stock shares of QQQ today would cost approximately $382.79 per share (as I write this on Tuesday). If the price rose to $390 you would make about $7.21.
Let’s discuss a Call option trade for our example. If you bought one call option that covered 100 shares of QQQ for the 390 strike, it would cost about $7.16 for the Sept 15th expiration date. This would be an investment of $716. If the price rose the expected $7, you could expect to make approximately $3.50. This would be a $350 profit on your $716 investment, or 49% profit.
Option trading is truly unique in its ability to give traders the opportunity to trade an equity’s price move in either direction.
You don’t have to wait until it hits the target or until expiration day. Once in a trade, options allow you to exit and take a profit (or limit a loss) at any time. You also want to wait for the indicator confirmation and don’t jump-the-gun with an early entry.
I love teaching and write my strategy books as clear as I write these emails. I try to think of the questions you’ll ask before you ask them.
I wish you the very best,
Wendy
Past potential trade update:
Last week we discussed buying QQQ calls. On 7-27 the Aug 18th 384 call was $3.60. You could have sold on 7-31 for $6.53, an 81% profit.
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The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the "Services") is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by Wendy Kirkland a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk and is not appropriate for everyone. The actual profit results presented here may vary with the actual profit results presented in other Wendy Kirkland publications due to the different strategies and time frames presented in other publications. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, Wendy Kirkland does not make any guarantee or other promise as to any results that may be obtained from using the Services. Wendy Kirkland disclaims any and all liability for any investment or trading loss sustained by a subscriber. You should trade or invest only "risk capital" - money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses.
Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Wendy Kirkland makes no representations or warranties that any account will or is likely to achieve profits similar to those shown. No representation is being made that you will achieve profits or the same results as any person providing a testimonial. Testimonials relate to various other products offered by Wendy Kirkland and not the product offered here, but all of these products are based on Wendy Kirkland's system. Performance results of other products described in such testimonials may be materially different from results for the product being offered and may have been achieved before the product being offered was developed.
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