Playing the QQQQ with Terry and friends. Message Board

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Strategies & Market Trends : Playing the QQQQ with Terry and friends.

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To: Slagle who wrote (447)	5/26/2005 11:57:24 AM
From: Kevin	Read Replies (1) of 4814

INTC weighting in the NDX (and QQQQ basket) of 4.59%. It would take a $62 billion jump in INTC's market cap ($10 gain in share price) in order to increase the NDX buy 27 index points for the NDX, which translates into .675 points in the Qs. As you see, it takes a substantial amount of coordinated activity to make the smallest movement in such a high market cap index. "Besides, if the stampeding herd of hedge funds act together and move the QQQQ that will in itself move the underlying stocks." Trust me, Hedge Funds don't "act together" to conspire to move the price of an instrument like this (hedge funds don't like competing hedge funds to know anything about their models/strategies/intentions). Hedge Funds would be buying/selling a product like this for reasons such as: - hedging purposes - stat arb models - index arb And yes, you are correct...one could buy an ETF at a premium or discount, compared to the cash index...however the markets are far more efficient in ETFs than CEFs, so there really isn't much of an arb opportunity between going long the ETF and shorting the constituents of the cash index for any meaningful profit. CEFs on the other hand are great for this. -K

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