Tony Parker – a regular contributor and experienced investor – is calling the bottom of the market. To quote what Tony said late last week: “Either today (Friday) or Monday will signify the bottom for the stock market…time to buy, buy, buy…and make some money in the process”. He has put $1000 of his own money to purchase QQQQ (Nasdaq Index ETF) Dec 35 call options – believing the bottom of the market is at hand and to profit from the short term jump in share prices expected. His logic is that the blood letting on the street has run its course and that because the QQQQ ETF has few significant financial companies in its index, it should rebound much faster. He is kindly agreed to share this trade (amongst other he made) with readers to Saving to Invest.
He was right and today’s 11% rise in the Nasdaq meant he more than doubled his money in 1 business day! Confirmation of the trade purchase and close is shown in the above graphic (click it to enlarge). Options are not for the new investor and carry inherent risk. However, using them to play the volatility can result in some spectacular gains (or losses) at times. As Tony said, “if you are a long term investor hold on to your assets and with the bottom close at hand, you should see some reasonable appreciation. However if you want to make some quick money in this market and understand options well then you gotta trade the volatility.” Options are the best way to do this and look at his post on the basics of options for more details.
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