Non-Farm payroll tactical trade
Nasdaq has fallen 2% since the start of the week with tech stocks already seeing a sell off in the run up to non-farm payroll Friday. The rotation from tech into value stocks is a story we have seen before earlier in the year. Buying a put on the QQQ Invesco QQQ Trust Series 1 is a great way to gain exposure to the Nasdaq for a much lower cost basis.
Non-farm payrolls are forecasted to be 239k. February NFP came in at 311K causing the market to fall. If the number is hotter than expected this will signal to the market that the Fed may well keep interest rates higher to get a grip on inflation thus hurting the high growth stocks that comprise the Nasdaq.
Buy a Put
Tactical trade opportunity
Buy 1 QQQ (10-Apr-23) 315 Put for $2
$2x 100 Shares underlying = $200
Potential Trade Outcome
The QQQ ETF in March dropped around 2%. This move would take the QQQ down to around 308.7
315-308.7= 6.3 x 100 = $630
This is a 315% return on your investment with just a 2% drop on the underlying.
Economic data releases create opportunities. Employing the leverage options give you is what makes using options such a flexible, tactical trading tool.