Out of My QQQ Long Call

Hi Main St beats Wall St,

I know I’ve been radio silent lately. I guess as I get older my schedule gets busier. I am getting a few trades in but then I find I have to move on to something else on my schedule before I post it. It’s that time of year to get some outside work done.

Recently I talked to a financial adviser at the company I invest with. The company is American Century. I’ve been with them a long time with a few retirement mutual funds. These mutual funds are a way for me to diversify so I’m not managing all my money. Over the years I’ve also invested in gold and silver and a few other things such as real estate. Diversification is very important.

I called this gentleman because my funds are doing so well I wanted to find out what types of companies my funds invest in. He told me about a bunch of companies but he said, “basically the funds you’re in just mimic the QQQ’s.”

QQQ is an Exchange Traded Fund based on the Nasdaq 100. I think most traders follow the QQQ’s but how many actually invest in the fund? I really don’t.

When I got off the phone, since my funds are doing so well, I decided to look into ways I could invest and benefit from the movement of the Nasdaq. I decided to buy a Call option. Most of you know I don’t invest in short term options so I bought a LEAPS. On April 17th of this year I bought 1 Call option which would not expire until January 2025. The Nasdaq went down for 2 day after I bought but since I bought out to January 2025 this was not a problem. I had plenty of time for the Nasdaq to go up. Today, after owning this QQQ option I decided to take profit. I bought the option for $38.80 ($3880) and sold the Call today for $49.00 ($4900) for a profit of $1020. I am very happy with this profit in a little less than a month. The return is 26.2%. As I write the Nasdaq continues to move up.

 

4/17/24 – Buy to Open 1 QQQ 1/17/25 $430.00 C @ $38.80

5/15/24 – Sell to Close 1 QQQ 1/17/25 $430.00 C  @ $49.00  

Profit +$1020 

 

We spoke about the power of buying options many times. We also spoke about the dangers of buying options. I feel the key to buying options is buying with plenty of time to give you some protection. The option I sold today had the expiration Date of January 17th. I could have held longer to possibly make more profit by continuing to benefit from the movement of the Nasdaq. And I can continue to benefit from the Nasdaq going up because I’m gonna buy another Call Option. You might ask, why did you just keep the option you had? Number one, I wanted to lock in some profit, and number two, I want an option that goes out a little further with the Expiration Date. Now that I sold my January option I’m looking at an option that goes out to June of 2025. The Nasdaq was up yesterday and today. I might wait a day or two for a pullback to buy the next option. I’ll let you know as soon as I buy it.

If you have any questions on QQQ send me an email.

 

Successful trading,

Steve

The Options Coach