The QQQQ, also known as the "cubes" (or “qubes”), are an
example of an exchange-traded fund (ETF). ETFs track major stock indexes
and can be traded just like a regular stock. The QQQQ track the NASDAQ 100
Index, which is composed of 100 of the biggest and most important stocks
of the NASDAQ Composite Index. Buying a share of the QQQQ ETF is just like
buying tiny fractions of 100 NASDAQ companies, including Microsoft,
Intel, Cisco, Dell, Amgen, and others.
because many speculators yearn for the euphoric days of the NASDAQ bubble times,
the QQQQ are the most widely traded financial instrument on Earth. Because they
are highly volatile, they have become a perfect vehicle for naked speculation.
For QQQQ options traders, it doesn't matter whether the NASDAQ and
the QQQQ move up or down, all that matters is that this trading vehicle is
volatile and highly liquid. Because of their high liquidity and constant
volatility, QQQQ prices can move up and down erratically. Speculator trading the
QQQQ don't care whether the NASDAQ 100 index soars or collapses, only that they
make the right bet on what will happen in the near future.
Fortunes are made and lost every day trading QQQQ options
- they are definitively not a trading vehicle suitable for everyone.
Trading these options is only appropriate for speculators who fully understand
what they are doing and who are equipped to handle the high risks.
When trading QQQQ options. you should consider the following:
- The expiration date. QQQQ options expire on the third Friday
of their contract month. At expiration, the options become worthless, because
the contract ceases to exist. As a speculator, make sure you buy only options
with an expiry date far enough into the future, so that there is sufficient
time for the underlying QQQQ stock to move in your favor, whatever bet on the
market direction you've made.
- Are the QQQQ headed higher or lower? If you think they are
going up, you should consider buying call options. If you think they will
fall, consider buying put options.
- Finally, you need to decide which strike price to trade.
For QQQQ options, numerous strikes are available for both puts and calls.
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