On Friday’s CNBC’s Options Action, the crew analyzed QQQ’s recent performance compared to the overall market (SPY). Analyzing the spread between QQQ and SPY shows an increasing spread, ready for a possible correction lower. Additionally, QQQ has printed new highs in the last month, but on a relative basis has failed to reach new highs. With a third of the index’s weights announcing earnings next week (AAPL, AMZN, GOOGL), there is risk that the QQQ’s will drop if any of the names misses on earnings. Expecting either a non-event or a move lower, Michael Khouw suggested selling a Dec 118/122 Call Spread for $1.85 Credit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: CNBC Options Action