New Options for Invesco QQQ Trust: Highlights and Analysis

Investors in Invesco QQQ Trust (Symbol: QQQ) have witnessed new options beginning trading today, set to expire on April 23rd. At Stock Options Channel, our YieldBoost formula has examined the QQQ options chain for these new April 23rd contracts, identifying one notable put and one call contract.

Put Contract Analysis

The put contract at the $405.00 strike price currently has a bid of $12.33. Investors who choose to sell-to-open this put contract would be agreeing to buy the stock at $405.00, while also collecting the premium. This setup would effectively lower the cost basis of the shares to $392.67 (before broker commissions). For those planning to purchase shares of QQQ, this presents an appealing alternative to the current trading price of $420.52/share.

Notably, the $405.00 strike price reflects an approximate 4% discount compared to the current trading price, meaning it is currently out-of-the-money by that percentage. The analytical data indicates a 65% probability that the put contract could expire worthless. Stock Options Channel will monitor these odds over time and publish a chart of these figures on our website’s contract detail page. If the contract does expire worthless, the premium would yield a 3.04% return on the cash commitment, or an impressive 79.37% annualized—an outcome we refer to as YieldBoost.

Call Contract Analysis

Shifting our focus to the call side of the options chain, the call contract at the $425.00 strike price shows a current bid of $15.45. If an investor buys shares of QQQ at the present price of $420.52/share and sells-to-open this call contract as a “covered call,” they would be agreeing to sell the stock at $425.00. By also collecting the premium, the total return (excluding dividends) would equal 4.74% if the stock is called away by the April 23rd expiration (before broker commissions). Caution is warranted here as potential upside could be capped if QQQ shares significantly rise, making it essential to assess both QQQ’s trading history and business fundamentals.

Below, you’ll find a chart illustrating QQQ’s trailing twelve-month trading history, with the $425.00 strike highlighted in red:

Considering the $425.00 strike reflects about a 1% premium over the current trading price, there is also a chance the covered call contract could expire worthless. In such a case, the investor would retain both the shares of stock and the premium received. Current analytical data shows a 52% probability of this outcome. Stock Options Channel will track these odds over time, publishing relevant charts on our website. If the covered call expires worthless, the premium could equate to an additional 3.67% return for the investor, or 95.79% annualized, highlighting another potential YieldBoost.

In summary, the implied volatility for the put contract is currently 59%, while the call contract reflects an implied volatility of 54%. In contrast, the actual trailing twelve-month volatility—considering the past 251 trading day closing values and today’s price of $420.52—calculates to 21%. For additional put and call options contract ideas, visit StockOptionsChannel.com.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.