I Just Made This Quick Trade with Invesco QQQ Trust (QQQ)… Potential 24.2% Annualized Yield

I’m alerting you to another income trade I made this past Thursday — this time with Invesco QQQ Trust (QQQ), an exchanged-traded fund (ETF) that seeks to track the performance of the Nasdaq 100.

At the time I placed my trade, QQQ was selling for $356.80 per share and the August 9, 2021 $355 put options were going for $7.50 per share.

My trade involved selling one of these put options…

My order ended up getting filled at $7.52 per share.

There are two probable ways this trade will work out…

Scenario 1: QQQ falls below $355 by August 9, 2021
If QQQ falls below $355 by August 9, I may be obligated to buy 100 shares at $355 per share… which is a $35,500 commitment.

In exchange for my agreement to that potential purchase obligation, I was paid an instant $752 (100 shares X $7.52 per share).

This money was immediately deposited into my 401(k) retirement account, where I made the trade.

Taking this income into consideration, my cost-basis on QQQ would drop to $347.48 per share.

That’s a 2.6% discount to the $356.80 share price that QQQ was selling for at the time I made this trade last Thursday.

Scenario 2: QQQ stays above $355 by August 9, 2021
If QQQ stays above $355 by August 9, the contract expires worthless and I get to keep the $752 in income.

This works out to a 2.1% return on what my purchase obligation would have been ($7.52 / $355) in 32 days.

If I can repeat these results over the period of a year I could generate a 24.2% yield from QQQ without even buying shares.

The neat thing about this trade is that it makes money if the QQQ goes up… stays flat… or even drops a little by August 9.

Greg Patrick

P.S. When it comes to selling puts, I’ve developed a few rules that fit my portfolio objectives. I only sell a put option if:

  1. I want to own the underlying stock anyways
  2. I’ll be buying the stock at a reasonable price (which is typically fair value or better)
  3. The strike price of the option I’m selling is At-The-Money (ATM) or Out-of-The-Money (OTM)
  4. I’m comfortable owning the stock for the long-haul in case the price drops significantly below my strike price
  5. I’m comfortable “letting the stock get away from me” if I don’t get “put” shares and the stock takes off
  6. My position-sizing makes sense if I’m “put” the shares
  7. I can make the trade in a retirement account, such as an IRA or 401(k) to minimize taxes and tax paperwork. 
Please keep in mind that these trade alerts are for information purposes only. We’re not registered financial advisors and these aren’t specific trade recommendations for you as an individual. Each of our readers have different financial situations, risk tolerance, goals, time frames, etc. The ideas we publish are simply ideas that we feel fit our specific needs and that we’re personally making in our own portfolios. You should also be aware that some of the trade details (specifically stock prices and options premiums) are certain to change from the time we make our trade to the time you’re alerted about it. So please don’t attempt to make this trade yourself without first doing your own due diligence and research.

Instant Cash Payouts: How I Sell Put Options for Safe Passive Income
In this video, I tell you about my put-selling strategy, introduce you to the seven rules I follow when selling put options, walk you through two recent trades I made with Starbucks (SBUX) where I sold puts that generated a total of $760 in income… and tell you about what I believe are the three biggest downsides to selling put options.