The QQQ is an ETF (Exchange Traded Fund) that gives investors the opportunity to invest in the Nasdaq 100. The Nasdaq 100 is the top 100 stocks listed on the Nasdaq Marketplace. The QQQ Exchange Traded Fund is basically a mutual fund that tracks stocks on the Nasdaq 100. An important benefit of an Exchange Traded Fund (ETF) is that an ETF does not have the administration fees and all other fees that are normally charged to mutual funds. fund holders
The QQQ is the most traded security in the United States. The symbol was recently changed to QQQQ, so it would have 4 characters and would be listed on the Nasdaq instead of the New York Stock Exchange. Although the symbol changed, it is still based on the same. In most circles it is still called QQQ, only trading under the ticker symbol QQQQ.
Since QQQ is treated in the same way as a stock, you can now trade options on it as well. People now make a living trading call and put options on the QQQ. Previously, this was not available as the only way you could trade the Nasdaq 100 was with futures contracts. Very few investors are familiar with the futures market and therefore have stayed away from it. Since you can now trade options on the QQQ, you can also use any of the option trading strategies that were normally only used on stocks. Some of the most popular options trading strategies are covered calls, ratio back spreads, bull put spreads, bear call spreads, iron condors, butterflies, and any other strategy that involves the combination of stocks and options.
Covered calls are probably the most popular option strategy for normal investors. It is a way to generate a monthly income from the shares you own. Here is a very basic explanation of a covered call: You own 100 shares of QQQ. Option contracts are only sold in increments of 100 shares. Since you own 100 shares, you can sell a contract to sell the QQQ to someone at a specified price in the future. You typically sell the contract at a higher price than the stock is trading for. If the stock doesn’t keep going up, the person won’t buy the stock from you, but you keep the money you got when you sold the contract.
