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Selling options using large-cap tech companies like Apple or Amazon and many others can be challenging due to the high cost. Using the exchange-traded fund, QQQ, is a great way to accomplish these strategies at a relatively low-cost and still have the large-cap tech presence. Option-chains, calculators and annualized returns are the focus of this podcast.
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I’m using PCP strategy on QQQ in one of my accounts. I started in 11/25/2020 and generated 5.20% returns to date (would be around 13-14% if annualized). Might look not that much, but as this was the first time I was implementing PCP strategy I was overall cautious selling deep OTM puts only. None of my puts were assigned so far, even if it was close during the tech selloff in early March this year. I plan to be a little more aggressive in future. My goal is to generate 15-20% annualized returns using QQQ PCP strategy. The only downside I see so far is that as I don’t want to put any additional funds into this account it’s difficult effectively to use all the cash I have. At current QQQ prices ($340) for 50K account you can sell only 1 QQQ contract and roughtly 15K will be hold as a cash, but I found that other tech ETFs can be used as replacement for QQQ (XLK, VUG). So for 50K account you can sell 1 QQQ contract + 1 XLK contract that trades around $140-145 now. Another solution might be selling 1 QQQ contract and buy QQQ stock for the rest.
In our current near 0% interest rate environment, an annualized return of 13% – 14% using a low-risk strategy does look impressive.
Keep up the good work.