"put/call ratio on the QQQs"
Nasdaq 100 Trust (QQQ): Watching The 220 Level
3/13/2000 11:11:27 AM
This morning, the Nasdaq 100 Trust (QQQ - 223) opened nine points lower to 220 and has traded at a low of 219-1/16. Soon after the open, large trades were going off on the out-of-the-money March 220 put. Volume on this option stands at 6,370 contracts on an open interest of 7,803 contracts. In addition, 2,381 contracts have traded on the April 220 put. These are now two of the most-active puts on the AMEX.
Looking at the intraday chart below, you can see that the 220 level was where the QQQ bounced higher earlier today (see the chart below). In addition to the volume at the 220 put, volume currently on the March 224 put is at 1,039 contracts on open interest of 3,613 contracts. Looking farther out in the April series, the 220 put is presently seeing volume of 2,373 contracts on open interest of 5,502 contracts.
It will be very important to see the translation of today?s activity into open-interest translations tomorrow morning. Additions of put open interest will give us continued bullish signs for the tech market, while liquidations could suggest that traders aren?t trading bearishly, and they are in fact already piled into the tech sector.
Bernie Schaeffer appeared on CNBC this morning and spoke bullishly once again on the tech sector, pinpointing the QQQ and its recent option activity. Schaeffer?s put/call open interest ratio (SOIR) has not even paused in its tremendous rise of late, and gave a reading at 7.85 as of Friday?s close. This is one of the highest levels the SOIR has reached for the QQQ of late (see the chart below). As the tech sector heads into uncharted territory, and options traders keep betting on a downfall in the sector, our contrarian reading gives a clear bullish signal. The reasoning behind this rationale is that when traders are betting against a trend and in the majority, like we?ve seen with the QQQ since November, they are usually wrong. That has been the case so far and is still continuing. To learn more about SOIR, check out Schaeffer?s Daily Sentiment.
In addition to the significant option activity at the 220 mark, it is also key to point out that the QQQ bounced off support from its 10-day moving average, which is in the 220-221 area (see the chart below).
¸ 2000, Schaeffer's Investment Research, Inc.
for charts etc:
schaeffersresearch.com
regards
|
