Playing QQQQ

When playing options, we could either play in-the-money options or out-of-money options. For QQQQ, I like to play in-the-money options with at least 30 trading days left. This is because in-the-money options tend to have a much smaller time-value than out-of-money options. For example, when QQQQ was at $36.00, the various in-the-money QQQQ options with its bid/ask price and time value were:

Options Description Bid/Ask Price Max. Time Value

• Aug $36 Put 0.95/1.00 1.00
• Aug $37 Put 1.50/1.55 0.55
• Aug $38 Put 2.15/2.20 0.20

Furthermore, when playing in-the-money QQQQ options (with at least $1.00 of intrinsic value), the movement of the option price follows the stock price movement very closely. As such, I get maximum price appreciation while putting up just a fraction of the price of the QQQQ stock. For example, by playing Aug $38 Put (say paying $2.20), when the price of the stock drops by $0.50, I could expect about $0.45 price appreciation for my Aug $38 options.

Another advantage for playing in-the-money options is that we minimise the time decay waterfall effect especially during the expiration week.

However, should the stock goes against you, you tend to lose more than those who bought out-of-money options.

- PersianCat04 (Millionaire-in-progress)