The Powershares Nasdaq 100 Trust (QQQQ) is a highly liquid, very popular ETF with actively traded options. But for traders who want to implement an options strategy on the Nasdaq 100 with any precision, QQQQ may not be the optimal product. Assume you are trading a strategy that includes the following rule: When the 14-day Relative Strength Index (RSI) closes below 30, sell a put with a delta of -20 in the nearest cycle with at least 14…
Monday, August 31, 2009
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We generally restrict iron condor trades in our paid newsletter and managed accounts to index products. For those who prefer ETFs, we look at SPY, DIA, IWM, QQQQ; otherwise, SPX, RUT, NDX, DJX are bigger proxies, or on the futures side of things we’ll look at the Emini S&P 500 or Nasdaq 100 (ES and NQ). The reason we trade index products is that diversification reduces the impact of company-level surprises: an iron condor on, say, RIMM will get…
Sunday, July 19, 2009
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Volatility Tracker for July 20, 2009 Equities had a strong week, but the view from the volatility front is not so clear – if anything, it favors caution rather than optimism. Volatility futures declined this week in absolute terms, but their term structures only steepened and have not changed their basic shape for several weeks now. [7] The VIX Premium Ratio has made another new high for the year. [8] Neither of these indicators are unqualifiedly bearish, but expectations of…
Tuesday, August 12, 2008
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Here are some data that have us thinking this afternoon: maybe the Nasdaq doesn’t resume its parabolic move from here. There are certainly plenty of short term reasons for Nasdaq bulls to frown and doze off for awhile: the QQQQs are up over 7% in 7 days. Money flow has been stagnant. The ADX line is only barely ticking up, and RSI readings at various periods are all inching toward overbought. The McClellan Oscillator (attached) may have peaked, and even…
Wednesday, August 6, 2008
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Wiser heads than ours are still thinking hard about the unrelenting credit troubles, the generally absurd situations of FNM and FRE, and the possibility that this time, socialism for the rich (that broad set of taxpayer-funded free love, free money policies available to large companies and major investors, but not to ordinary people) might not pull us through. If our bearish data points from yesterday weren’t enough, here are some more: There was a big divergence in…
Friday, December 11, 2009
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