In February we followed a professional investor to enter an Invesco QQQ Trust (QQQ) Debit Spread. If you were with us back then and entered the trade, you might be holding the 395/350 put debit spread for December 20th expiration.

Today a professional investor with a near-identical bearish position did a roll-up. While we bought the 395 put back in February, they bought the 390 put, spending $210,715,000. Yesterday, they sold their put for $106,578,000. They then used that cash to reduce the cost of purchasing the December 424.78 put for $206,274,000 for a net of $99,160,000.

While we are not holding the 390 put, we can sell the 395 at a higher price from our open position to do the same kind of roll-up as the professional investor. It makes sense to update our position right now while options prices on QQQ are relatively inexpensive.

The chart below shows that the 6-month implied volatility (the lower blue line) is near its 1-year low. This tells us that options prices are also near the 1-year low relatively speaking.

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We followed a professional investor with our trade idea back in February. It makes sense to follow a professional now to adjust the open position by rolling up the option we previously bought. A roll-up trade is when you sell an option you currently own and buy an option at a higher strike price with the same expiration.

This adjusts our position to make profits quicker if QQQ drops below the strike price of the new option.

Be sure to read the ODDS Online Daily Trade Idea report to get the details of our trade idea for QQQ.

To access Odds Online Daily and be able to see any stock you are tracking in this software, click here.

Thank you,

Don Fishback