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Option On Stocks - Trade the Nasdaq 100 with Stock and Options
Option On Stocks
The QQQ is an ETF (Exchange Traded Fund) which gives investors a chance to invest in the Nasdaq 100. The Nasdaq 100 are the top 100 stocks that trade on the Nasdaq Marketplace. The QQQ Exchange Traded Fund is basically a mutual fund that tracks the stocks in the Nasdaq 100. One major benefit of an Exchange Traded Fund (ETF) is that an ETF doesn't have the management fees and all the other fees normally charged to mutual fund holders.
The QQQ is the most actively traded security in the United States. The symbol was recently changed to QQQQ so it would have 4 characters and trade on the Nasdaq instead of the New York Stock Exchange. Even though the symbol changed, it is still based on the same thing. In most circles it is still called the QQQ, it just trades under the ticker symbol QQQQ. Option On Stocks
Since the QQQ is treated the same way as a stock, you are now able to trade options on it as well. People are now making a living trading put and call options on the QQQ. This was previously unavailable since the only way you could trade the Nasdaq 100 was with futures contracts. Very few investors are familiar with the futures market, and therefore stayed away from it. Since you are now able to trade options on the QQQ, you can also use any of the option trading strategies that were normally only used on stocks. Some of the more popular option trading strategies are covered calls, ratio backspreads, bull put spreads, bear call spreads, iron condors, butterflies and any other strategies that involve combining stocks and options.
Covered Calls are probably the most popular option strategy to normal investors. It is a way to generate a monthly income from stocks that you own. Here is a very basic explanation of a covered call: You own 100 shares of the QQQ. Option contracts are only sold in 100 share increments. Since you own 100 shares you can sell a contract to sell the QQQ to somebody at a specified price in the future. You normally sell the contract at a higher price than the stock is trading. If the stock doesn't continue to rise, the person won't buy the stock from you, but you get to keep the money that you got when you sold the contract. Option On Stocks
Option On Stocks - Trade the Nasdaq 100 with Stock and Options
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