On this page you will find strategies that enhance
Bullish position Sideways markets Hedged Position
Bullish Position (and sideways)
Market Must be at or near ATH
QQQ must be up 2% minimum to execute this position
Buy 1000 shares TQQQ (assuming $50/share)
Sell 5 call options 22.5% ITM (same as QQQ 7.5% ITM)
These are quarterly options (not monthlies)
If QQQ is up 7.5% roll options into next strike, maintain 7.5% ITM
If QQQ is down 7.5% close options create hedge
The goal is to create a risk/reward of $4,000 to make $5500
This position creates a sideways element of about $500
Hedged Position (and sideways)
Market Must down 7% from ATH
QQQ must be down 2% minimum to execute this position
Hold 500 shares TQQQ (assuming $40/share)
Buy-to-close call options (extrinsic collapse will benefit you)
Buy about 200 shares SQQQ ($80/share) (must balance position size slightly less than TQQQ)
Sell 5 contracts of TQQQ puts 22.5% ITM (not SQQQ calls)
If QQQ is recovers 5%+ roll back into Bullish Strategy
If QQQ continues sell-off, SQQQ will continue to expand, hold until break even
The goal is to create a risk/reward of $4,000 to make $5500
This position creates a sideways element of about $500
Why These Strategies Work
You are selling premium at full value, imagine a full glass of water
Selling DITM calls in a strong market cannot gain any extrinsic value, market collapses, so goes the full cup of water
Same rule applies to selling puts in a down market
Lets understand why I sell TQQQ
When markets selloff, the TQQQ's cannot go beyond $0, meaning the puts are limited, also the TQQQ is constantly selling futures to maintain its 3X leverage, this also prevents it from going to $0.
At the same time SQQQ is expanding, continuously adding (short) futures contracts to maintain it's 3X leverage, theoretically, this could go to infinity, you don't want to be selling options that go to infinite, you want to sell options that have limited expansion.