Nvidia (NVDA) has shown signs of profit-taking, indicating a potential slowdown in the tech sector. This could lead to bearish trading opportunities, with focus on a bearish trade on the Invesco QQQ Trust, an ETF tracking the Nasdaq 100 index. After reaching a record high, QQQ is facing resistance at $486. Fibonacci retracements suggest a potential pullback to around $459, a 5.5% retracement level. The chosen trade strategy is a bear call spread, selling a $483 call option and buying a $488 call option. This trade offers a 38% ROI if QQQ remains below $483 in the next 17 days. Credit spreads are considered high probability trades, with a 66% probability of success in this specific trade setup. Effective risk management is crucial when trading credit spreads to minimize losses and maximize gains over time. These trades can be rewarding with a well-thought-out risk management plan in place. The opinions expressed are solely those of the author and do not reflect those of CNBC or its affiliates. This content is for informational purposes only and does not constitute financial advice. Before making any financial decisions, individuals should seek advice from a financial or investment advisor.
Article Source
https://www.cnbc.com/2024/06/25/a-bearish-options-trade-that-wins-if-nvidia-and-the-qqqs-continue-to-cool-off.html
