Power Up Your Portfolio with A Quick QQQ Scalp

At market close the POWERSHARES ETF (QQQ) was trending in a narrow range, having found support and bounced off the 99.68 level. My prognosis is that we will see QQQ bounce up to test the resistance at $103, then from there a move down over the next week to prices below $99.

qqq status
click to enlarge

Here’s a wonderful way to play that, using the banker’s money to finance a credit spread. If it never happens, and the stock stays stagnant, there is only a miniscule loss of about $5, and at bigger drops there is even a small maximum gain of $40. For every position you commit to this trade, you must have $2000 in margin. You have about a 1% chance of losing $5 and and 95% chance of making between $1 and $500. Those are odds anyone would like.

The Opportunity

  • Probability of success : greater than 95%
  • Risk : Reward : around 1 to 50
  • Duration: 2 day trade
  • Minimum Investment: -$40 (credit)
  • Maximum Investment: none
  • Margin Requirement: $2k per contract
  • Maximum Probable Loss : $5
  • Maximum Probable Gain : $250
  • Maximum Possible Loss : $5


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