Nasdaq Shorts Pay Off, but the Largesse May Not Last
If you believe the options market, the Nasdaq is going down in flames.
So if you own a portfolio tilted heavily toward the highflying index, now may be the best time for selling call options on the Nasdaq.
"People are just way, way too pessimistic about the Nasdaq," noted Jerry Wang, strategist with Schaeffer Investment Research in Cincinnati. TSC pointed out Monday that put-buying in the QQQ (QQQ), the Nasdaq 100 unit trust, exploded for several trading days. Tuesday extended the trend: Among the most active QQQ options were the March 180 puts, in which a 10,000-contract order crossed at a price of 5 7/8 ($587.50), up 1 ($100).As the words passed his lips, however, the Nasdaq was down nearly 100 points at midday and Monday's put-buyers are looking awfully smart.
Among other interesting option trades, State Street (STT) posted an outsized trade of 510 March 75 put options, 510 contracts traded vs. the open interest of 86. Shares of the stock were up 13/16 to 27 5/16, and the puts, generally purchased as bets that a stock will fall, were up in price, 5/16 ($31.25) to 2 9/16 ($256.25).
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