Squid Options » QQQQ

QQQQ vs NXT

Squid — Mon, 09 Apr 2007 08:28:27 +0000

I was reading over on IndexUniverse that “NYSE Arca Tech 100 ETF Offers Challenge To QQQQ”.

I really don’t know what the author was thinking. The NYSE Arca Tech 100 (NXT) is the old Pacific Exchange 100 Index. That is not the only thing old about the NYSE Arca Tech 100.

The index is price weighted, NOT by capitalization. That means smaller stocks make up a larger percentage of the index. This may not seem like a problem, until you try some sort of hedge where you need to buy all the stocks in the index. Buying a price weighted index , well acts more like a benchmark than a trading vehicle. This is something that I think I could write condors on a day.

Now the NXT is tax efficient, but carries a higher expense ration than others. Now it is a “Lower Expense ratio compared to the average actively managed mutual fund” as claimed on the http://www.nxt100.com/ website. Isn’t one of the reasons we buy ETF’s instead of mutual funds is the supposed lower expense ratio.

The only reason I can see this thing is as a benchmark. Maybe something you want to buy as a proxy for a diversified tech portfolio. But diversification alone does not make up for the fact that this ETF is just like all the others with a higher expense ratio. If you want the diversification, get spiders. If you want tech exposure, buy the QQQQ. I haven’t run the numbers, but I suspect the NXT is “a horse of an average color”.

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EOW – End of the week

Squid — Fri, 30 Mar 2007 04:25:19 +0000

For Friday, I am looking at support at 43.15 / 42.75. I am looking to close another position at 43.15. Support at 43.95 / 44.25. The only report that may have a big impact is the Department of Commerce’s Construction Spending report reported at 10AM. So I am going to to be looking for a trade around then.

The construction spending report reports residential, non-residential, and public expenditures on new construction. usually, this is not a big deal, since monthly reports are subject to friggin’ huge revisions month to month.

The Personal income report comes out before the open. It is an indicator of future consumer demand. When consumers stop spending, it is bad for growth.

Mar 30 reports
8:30 AM Personal Income, Personal Spending
9:45 AM Chicago PMI
10:00 AM Construction Spending

Friday QQQQ support 43.15 / 42.75 Resistance at 43.95 / 44.25

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Coming into the weekend…

Squid — Thu, 29 Mar 2007 08:11:03 +0000

For Thursday, I think all bets are off. I am looking at a tighter range around the market. I will probably take a directional position based upon which line ( support / resistance ) is broken.

There are some reports , Initial Jobless Claims , and Gross Domestic Product , that are coming out at 8:30, so I cannot expect that information will have been factored in as analyst will have time to read, studied and analyze the reports.

I am thinking more about 1Option’s position that the small trader should take directional bets. I cannot predict the market with 80% accuracy yet, so I have a while to go. But I do think I will have to go more directional to increase my returns. I would have made a lot more if I had bracketed my orders yesterday. When the market was making a triangle, one order above and below with a trailing stop would have made me some money.

I will have to practice those in my paper trade account today.

~squid

Thursday QQQQ Support 43.35 Resistance 43.90 / 44.25

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EOW – End of the week For Friday, I am looking at support at 43.15 /...
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Long day of nothing

Squid — Thu, 29 Mar 2007 02:38:00 +0000

Well, I put on a long Long strangle QQQQ @ 43.82 @ 10:00 A.M. right at my support level. They both had narrow spreads. The IV was not too expensive. I wanted some downside protection so that if things did not go the way I wanted, IV would not plummet. I also went for APR as the MAR options expire this week.

bought APR 45 calls – 15.68% IV – narrow spread
bought APR 43 puts – 18.37% IV – narrow spread

The 10:30 AM Crude Inventories report came out and the market did move. I was hoping that Bernake would come out with bad news and we would have a good day. However he didn’t, the news was middle of the road. I was looking at 43.55 as an exit point on the downside.

After his testimony started the market seemed to take a breather to decide on what to do, and the answer was to rally. SO I was back up a little, on the other side of the strangle. I was looking to see if I could bail around 44.35, but the market did not continue the rally and failed and fell back.

I wasn’t happy about this trade, so I bailed around 2pm. I broke even on this trade.

What I did see was that a bracket order would be better when the market starts to make a triangle pattern before news. Also, when the market is nervous, I think these can work out better.

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Sat out yesterday

Squid — Wed, 28 Mar 2007 11:40:38 +0000

The market held inside my support and resistance points all day. Did not see any good trades, so I remained on the sidelines.

We have lots of news that can move the market, so I will be looking for some event trading, other than that , i probably will stay out.

Wednesday Support 43.83 / 43.55 Resistance 44.35

~squid

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Monday was a good example

Squid — Tue, 27 Mar 2007 01:13:53 +0000

Monday was a great example of how support / resistance levels are set and used. Yesterday, I set support @ 44.0. This level is where there is ‘congestion’ in the market. This is both on the down and upside. So when the market goes thru a support level , that level then becomes a resistance level.

So Monday, after the housing market report, the market blew thru support. Once it blew thru the support, the 44.0 level then became resistance on the upside. From the chart below, you can see the market did hesitate at the 44.0 level until the afternoon.

From 12:30 to 2 p.m. , the market re-tested the 44.0 level. Finally at 2 p.m. the market pushed thru closing higher.

Tuesday QQQQ : Support 43.85 | Resistance 44.45 / 44.7

~squid

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Expiration Week

Squid — Mon, 26 Mar 2007 13:28:58 +0000

Another day, another week. Options are expiring this week. I am going to hold off on my analysis until later in the week, when I get a better idea of the levels I plan to trade.

The QQQQ’s ended up with a narrow range on Friday. A failed move on Friday, puts resistance at around the 44.25 level. It is going to be really tight, and unless we have a bear day, the QQQQ’s will break thru that level. The next resistance level will be around 44.5.

The first time thru a level, the QQQQ’s will fade, so I am going to make sure it is a good move before going long.

Monday QQQQ : Support 44.0 | Resistance 44.5 to 44.3

UPDATE : 9:55 AM NYC Time [ We have the new home sales report due at 10:AM that could move the market]

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Another good day

Squid — Wed, 21 Mar 2007 04:51:15 +0000

Another good day on the street. The QQQQ’s took out my resistance at 43.45. It did mill around at 43.40 for a while. After running up, it ran into more pressure. And ont the way down again started to run into conjestion at 43.45. Once you go past a resistance level, it becomes a support level.

Wednesday QQQQ : Support 43.3 & 43.0 | Resistance 43.75 to 44.0

The resistance is a range today. I see strong resistance in that range, not just one number. I am moving support to where yesterday’s congestion cleared.

~squid

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The market shows some strength

Squid — Tue, 20 Mar 2007 03:53:17 +0000

The market shows some strength on Monday. The cubes had started out above my resistance of 43, so 43 became the level I looked for support. The market did find support there, and rallied higher , closing at 43.27.

I think we will still see support around the 43 level, and my resistance level has moved up to 43.45 A pretty narrow spread, so look for a breakout on Tuesday. If support is broken at 43 on the downside, we should see more support around 42.75.

In the short term, the QQQQ’s are looking overbought. I still list 44 as a significant level on the upside.

I sold my options near the open. It may have looked like if I had hung on I would have made more. I do think “The first loss is the best loss” and I did the right thing by closing out. I did close out with a profit on the trades.

Tuesday QQQQ : Support 43.0 & 42.75 | Resistance 43.45
Short Term Resistance 44.0

Chart courtesy of StockCharts
~squid

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Closed my positions

wenzi — Sun, 18 Mar 2007 18:49:56 +0000

The MAR 42 Puts I sold at the open. The QQQQ’s gapped up. I held off closing my positions until it looked like it was going to refill the gap. , then I closed the MAR 43 calls. They were leftover from a multi leg trade. I really screwed the pooch on that trade, but it still came out profitable.

Funny thing is, the spreads were less than sucky for the 43 calls. They were still sucky, but better than normal. On an open like this, the spreads tend to be pretty wide.

Right now, I am flat in my account. I have some things coming up , and I won’t be back trading until next week.

UPDATE : I did scale out gettign out of the trade. I sold some of the position first, then held on to the other part for a little bit to see if it was going to mive back up.

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