Option Trade: Gain Bullish Leveraged Exposure To Big Tech

TL;DR

Learn how to set up a bullish calendar spread strategy for gaining upside exposure on QLD tech stocks without risking too much on the downside.

Transcript

[Applause] hey option traders for today's strategy we're going to take a look at a bullish calendar spread in qld tech stocks bounced back strongly yesterday with the nasdaq qqq trust etf jumping nearly one percent the pro shares ultra qq etf ticker symbol qld was added as a full position on swing trader qld offers a two times leveraged position on... Read More

Key Insights

• 🧑‍💻 QLD is a two times leveraged ETF on the Nasdaq 100 Index, making it appealing for traders bullish on tech stocks.
• 🙃 The bullish calendar spread strategy allows traders to gain upside exposure on a stock or ETF while limiting downside risks.
• 🍉 Setting up a calendar spread involves selling a short-term option and buying a longer-term option with the same strike price.
• 🌸 The net cost of the trade is the maximum potential loss, while the potential profit depends on changes in implied volatility.
• 🤑 Practice with a virtual trading account before risking real money in options trading.
• 😚 Investors should be aware of the high risk involved in options trading, where they can potentially lose 100% or more of their investment.
• 💁 Investors.com options provides more option trading tips for those interested.

Questions & Answers

Q: What is a bullish calendar spread strategy?

A bullish calendar spread strategy involves selling a short-term option and buying a longer-term option with the same strike price to gain upside exposure on a stock or ETF while mitigating downside risks.

Q: Why would someone choose QLD for a bullish calendar spread?

QLD is a two times leveraged ETF on the Nasdaq 100 Index, meaning that it offers double the returns of the index. If someone is bullish on tech stocks, QLD can provide amplified gains.

Q: What is the net cost and potential profit of the described calendar spread trade?

The net cost of the trade is around $188 per spread, which is also the maximum potential loss. The estimated max profit is around $412, depending on changes in implied volatility.

Q: What is the ideal scenario for a bullish calendar spread on QLD?

The ideal scenario is for QLD to rise up to $145 around May 21st with very little change in implied volatility. This would result in a net profit for the calendar spread.

Summary & Key Takeaways

• QLD, a two times leveraged ETF on the Nasdaq 100 Index, is a good option for traders bullish on tech stocks.

• A bullish calendar spread involves selling a short-term option and buying a longer-term option with the same strike price.

• The trade's net cost is around $188 per spread, with a potential max profit of around $412 if QLD stock rises to around $145 by May 21st.