To The Moon

During last night's U.S. stock trading session, the three major indexes were generally weak and volatility converged: the Dow Jones Industrial Average fell slightly, the S&P and the Nasdaq also closed lower after an intraday tug of war, and the market's pricing of "good growth but later interest rate cuts" is still fermenting.

At the disk level, the pressure is mainly concentrated in the subdivision direction related to high valuation growth and "AI narrative": on the one hand, high interest rate expectations make valuation discounts more demanding, and funds are more inclined to avoid technology stocks with longer duration; On the other hand, the market has begun to be more picky about the commercialization efficiency and return on investment brought by AI-while giants continue to increase computing power and data center capital expenditures, the short-term pressure on profit margins and free cash flow has been amplified and interpreted, which in turn triggers Valuation repricing.

In this atmosphere, it is more difficult to track the QQQ trend of the Nasdaq 100 to "follow the wind": there is a lack of continuous buying relay after many recent rebounds, and the short-term is more like a weak high volatility; Judging from the data of the day, QQQ closed around $612, still below the pressure-intensive area above, and the market's tolerance for further downward movements is increasing.

If your core judgment is: the valuation of technology stocks is still under pressure, the return on AI investment continues to be questioned, making it difficult for QQQ to effectively break through the upper range, and there are still downside risks in the short term, then you can use the following groupQQQ Bear Call Spread: Sell 618 Call, Buy 621 CallHedging: Under the scenario of "limited upside/weak shock", collect net premium to resist pullback/retracement; At the same time, the high strike price Call of buying is used to cap the upside risk caused by the extreme rebound (the break-even point is about 619.32).

QQQ Bear Call Credit Spread Strategy

1. Strategy structure

Investors in$Nasdaq 100ETF (QQQ) $Build a Bear Call Spread strategy on options.

This strategy is a bearish/shock strategy that collects premium, limited returns, and limited risks. It is suitable for judging that it is difficult for QQQ to effectively break through the upper pressure area, maintain sideways or fall back before expiration.

1 ️ ⃣ Sell lower strike price Call (main source of income)

• Sell 1 Call with strike price K ₁ = $618

• Premium received = $4.06/share

This Call is closer to the current price and is the main source of revenue for Strategic premium. As long as the expiration price is ≤ $618, the option lapses and the investor retains all premium rights.

2 ️ ⃣ Buy higher strike price Call (control upside risk)

• Buy 1 Call with a strike price of K ₂ = $621

• Premium paid = $2.74/share

This Call is used to limit the risk when QQQ rises sharply and avoid the amplification loss caused by naked selling Call.

3 ️ ⃣ Call-side net income (per share)

Net premium revenue was:

4.06 − 2. 74 = $1.32/share

This is the maximum available benefit of this strategy.

2. Maximum profit

When the QQQ expiration price is ≤ $618:

• Both Calls are out of the price

• All option lapse investors retain full net premium:

• Maximum profit (per share) = $1.32

• Each contract (100 shares) = $132 Conditions of occurrence: expiration price ≤ $618

3. Maximum loss

When the expiration price is ≥ $621:

• Both Calls are in-the-money

• Strike spread is fully locked Calculated: Strike spread = 621 − 618 = $3 Maximum loss (per share) = Strike spread − Net premium = 3 − 1.32 = $1.68/share

• Maximum loss per contract = $168 Conditions of occurrence: Expiration price ≥ $621

4. Break-even point

Formula:

Sell Call Strike Price + Net premium

= 618 + 1.32

= $619.32

Maturity judgment:

• Price ≤ 619. 32 → Profit

• Price = 619.32 → No profit, no loss

• Price ≥ 619. 32 → Loss

5. Strategic characteristics and applicable situations

Strategy Characteristics

• Clear bearish/shock strategy

• Charge premium structure, time value benefits investors

• Maximum profit and maximum loss are determined after opening a position

• Compared with naked selling Call, the upside risk is capped

Applicable situations

When investors judge:

• Significant pressure on QQQ around 618

• It is difficult to break above 621 in the short term

• I hope to obtain relatively stable income by selling time value

• Or establish a closing premium strategy when the implied volatility is high

The essence of this structure is:

"Use the risk of $1.68 to gain a profit of $1.32",

The winning rate is usually high, but once it breaks through the pressure level upward, the loss will accelerate (but the upper limit has been capped), which is more suitable for use when the shock is weak or the upper pressure is clear.