Revealed: My Top 3 Trades for This Week

by Options Sensei

Stocks took a scary dip last week, but no technical indicators were broken and the bullish bounce still seems in effect. With this in mind, I’m looking to add a bullish position in a couple of individual names while overwriting them with a bear call spread in the “Nasdaq (QQQ – Get Rating)” as a means of both hedging and collecting short term premium.

As I mentioned in last Friday’s article, the generals, better known as FAANG or the big five, those being Apple (AAPL),” “Microsoft (MSFT),” “Amazon (AMZN),” and “Alphabet (GOOGLE)”,  which now represents 42% of the QQQ, cannot continue to lead the indices much higher without the middle-level soldiers following.

With that in mind, I hunted for some names that I believe have upside but wanted to sell a QQQ bear call spread to create a customized “overwrite or covered call to my portfolio, which provides a slight hedge and helps mitigate adverse headwinds inherent to options such as theta decay.

The first name I added was  “SPDR Biotech ETF (XBI) “ it’s comprised of names such as “Regeneron (REGN)” and “United Therapeutics (UTHER)” but none of the over 122 names account for more than 3.5% weighting.  It’s a field bet on the smaller biotech stocks. And right now, it’s hot for the obvious reasons; COVID and gambling on COVID.

The ETF has been strong, pushing to new highs on Friday and holding steady above $106 support today.  I don’t… Continue reading at StockNews.com

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