Trade Alert - (QQQ) May 9, 2025 - BUY

When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.

 

Trade Alert - (QQQ) - BUY

Buy the Invesco QQQ Trust (QQQ) June 2025 $540-$550 in-the-money vertical bear put debit spread at $8.70 or best

 

Opening Trade

5-9-2025

expiration date: June 20, 2025

Portfolio weighting: 10% weighting

Number of Contracts = 13 contracts

I have been watching the (QQQ) very closely during the past rally, and something interesting happened.

The (QQQ) failed to substantially outperform the S&P 500 to the upside, as they have done with every rally for the past many years. This represents a major change in market preferences.

I think this new trend will continue as long as (QQQ) stocks trade at a premium to the main market, which currently has an earnings multiple of 30X. The NASDAQ premium has already shrunk a lot this year, from 35X earnings down to only 25X earnings, versus 22X for the S&P 500. It has yet to come in line with the (SPY), or even trade at a discount, which it can and has done in the past. That makes the (QQQ) look very rich.

That suggests to me that the (QQQ) will lag to the upside but move double time to the downside in any future market correction. With the (QQQ) straight up for three weeks, that makes it a great short right here.

The trade war is over. All the good news is in the price.

Well….not really.

Yesterday, the president announced a trade deal with the UK that is not really a trade deal and doesn’t move the needle an iota. I’ll go into detail in the Monday letter. Many of the deals announced today were in fact agreed to years ago by the previous administration years ago.

It reveals a pattern. One fake trade deal done, 79 to go.

Once people figure this out, the stock market has a good chance of peaking out in the next few days and testing new lows.

We have just seen a monster $102, or 25.5% rally in the (QQQ) shares, creating yet another window for a short play.

We also have the Mad Hedge Market Timing Index at a highish 62, a 2 1/2 month high. This trade also benefits from huge upside resistance from the 200-day moving average at $490.05. The shares performed a dead cross a month ago, meaning that rallies should fail.

Therefore, I am buying the Invesco QQQ Trust (QQQ) June 2025 $540-$550 in-the-money vertical bear put debit spread at $8.70 or best.

DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.

Don’t pay more than $9.20 or you will be chasing.

Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order.

If you don’t want to sit in front of a computer screen all day or live in a foreign time zone when the US stock market is closed, such as Australia, or don’t want to sit in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like  $9.30, $9.20, $9.10, $9.00, $8.90, and $8.80. You should get done on some or all of these.

The Invesco QQQ Trust (QQQ) is an exchange-traded fund (ETF) that tracks the performance of the NASDAQ 100 Index. It provides exposure to the 100 largest non-financial companies listed on the NASDAQ. The QQQ is passively managed, meaning it aims to replicate the index's performance, keeping its expenses low. It has a huge market Capitalization of $83 billion, making it one of the largest traded ETFs.

The top ten holdings of the Invesco QQQ Trust (QQQ) are:

Microsoft (MSFT)
Apple (AAPL)
Nvidia (NVDA)
Amazon (AMZN)
Broadcom (AVGO)
Meta (META)
Netflix (NFLX)
Costco (COST)
Tesla (TSLA)
Alphabet (GOOGL)

To learn more about the Invesco QQQ Trust (QQQ), please click here to visit their website.

With this trade, I am willing to bet that (QQQ) shares will not rise above $540 by the June 20 option expiration in 29 trading days.

Here are the specific trades you need to execute this position:

Buy 13 June 2025 (QQQ) $550 puts at……….…....$63.00

Sell short 13 June 2025 (QQQ) $540 puts at…….$54.30

Net cost:……………………….………............……….……$8.70

Potential Profit: $10.00 - $8.70 = $1.30

(13 X 100 X $1.30) = $1,690 or 14.94% in 29 trading days

 

 

 

 

If you are uncertain on how to execute an options spread, please watch my training video by clicking here.

The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.

Don’t execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile on expiration months farther out.

Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.