Weak jobs data was the last critical data point for the Fed and it did not solidify if they cut by a quarter or half point less than two weeks at their September meeting. But it did reinforce a weakening economy. With the tech sector continuing to see profit taking, I want to establish a short-term bearish view and utilize the very popular QQQ ETF which tracks the Nasdaq 100 Index. QQQ .SPX YTD mountain Invesco QQQ Trust vs. SPDR S & P 500 ETF, YTD Market sentiment continues to shift after a tumultuous August and an already volatile start to September. The disparity amongst the U.S. major indices underscores the continued rotation out of tech. Investors should continue to pay attention to the leadership of tech stocks. However, they currently are being used as an ATM machine as the Mag 7 has seen significant profit-taking. Nvidia has been the poster child for profit taking as the AI darling is still up over 100% year-to-date, but it is down over 20% from its all-time 2024 high print. The trade With the Cboe Volatility index oscillating around 20, this elevated volatility regime has seen an increase in option premiums. When option premiums elevate, I like to use spreads to help reduce costs and as always, define risk. Bought the QQQ 9/20/2024 $455 put for $8.00 Sold the QQQ 9/20/2024 $440 put for $3.75 This Put spread cost $4.25 per one lot, $425 QQQ was trading roughly at $456 when this trade was executed. If QQQ does move lower to its 200-day moving average at $441, this spread has the ability to fill out. The maximum profit for this is the $15 spread minus the cost of the spread, $10.75 or $1,075 per one lot spread. In the event the tech sector rebounds before 9/20/2024 (expiration of this spread), the maximum loss is contained to the amount of the spread, $4.25 or $425 per one lot. DISCLOSURES: (Long the spread) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
