A week after tech earnings, we finally saw buyers run out, and the Nasdaq 100 index took a hit:
I don't know if this is a "one off" event with a push to new highs, or if we'll see a bit more of a shakeout. Yet into that move, I closed out a profitable bearish setup that did not have a ton of risk involved.
If you tried to bet on downside in tech over the past month, it was very frustrating. The continued run higher in large tech stocks helped QQQ stay elevated for nearly a month. Buying puts during that time would have led to costly losses as the premium decays over time.
Instead of buying a bunch of puts and hoping you nail the timing of a pullback, you can instead look at put calendars. This option strategy gives you downside protection without taking a ton of heat if the market goes higher or grinds sideways.
The video below gives you the full details of the trade setup.
IncomeLab is an option trade service where every trade entry, adjustment, and exit comes with a video fully explaining the "why" behind each trade. It's perfect for newer traders who need a little help with more complicated option trades as you can fully understand how these strategies can work in real time.
This video was recorded live for IncomeLab clients, no hindsight here:
After about a month, the trade was closed out for a gain of 30% returns, with only a small drawdown on the position. No stress, no headaches, just a clean profitable trade.
If you're looking for option trading setups that get you the best risk/reward out of the market, then become a client of IncomeLab.