An options trade for playing a potential move to record levels in the Nasdaq-100
The month of May added to the remarkable V-shaped comeback equity rally in the wake of "liberation day." As I expect June to be another positive month in U.S. equities, I want to remain bullish as the bears seem to weaken on a daily basis. After a nearly 25% bounce off the April lows, I see more upside and an all-time high retest coming. I am defining my risk by using options on the Nasdaq-100 ETF (QQQ) to participate in this bullish move. May caught many bearish traders by surprise. Analysts continue to have to reconfigure their 2025 end-of-year price targets. The S & P 500 and Dow Jones Industrial Average popped 6% and 3.8%, respectively, in May. The higher beta Nasdaq-100 (QQQ) surged 9% this month, on track for its best month since November 2023. The continuous neck-snapping moves for investors trying to monitor tariffs on a 24/7 basis, feels more like watching Forrest Gump in one of his fast-paced ping-pong matches. President Donald Trump said this morning China violated its preliminary trade deal splashing out one of his social media posts after Treasury Secretary Scott Bessent said U.S.-China trade talks "are a bit stalled." U.S. equites turned lower after Trump's post to start trading for the last day of the month. I remain optimistic that we will find a deal with China but, as expected, it will not be a straight-line path for negotiations between our economies. Additional fuel into the bullish thesis: Inflation rate slipped to 2.1% in April, lower and cooler than expected, per the latest reading of the Fed's preferred inflation gauge (PCE). Markets have been grappling to determine if tariff policy has been inflationary or even possibly deflationary (demand dampened). Earnings season resiliency, cooler-than-expected inflationary data, coupled with my optimism on overall trade tariffs being resolved this Summer, markets seem poised to push higher and test the nerve of the under-invested. I am using the 200-day moving average down around $497 to help me establish what level I am selling puts at to finance the upside calls I am buying. $540 is the level I would like to see QQQs retest. The trade: Selling a risk reversal Sold the QQQ June 27 $500 puts for $6.25 Bought the QQQ June 27 $525 calls for $8.00 This debit spread costs $1.75 or $175 per one lot spread This trade was executed when QQQs was roughly trading $516 DISCLOSURES: Kilburg owns the spread above and is long QQQ. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
11 minutes ago
- Yahoo
Why Unity Software Stock Skyrocketed This Week
Unity stock got a big boost from bullish analyst coverage this week. Solid gains for the broader market also helped lift Unity's share price. Jeffries is seeing signs that Unity's AI-powered digital-advertising platform could power a comeback for the company. 10 stocks we like better than Unity Software › Unity Software (NYSE: U) stock closed out last week's trading with big gains thanks to bullish coverage from an analyst. The company's share price ended this Friday's trading up 25.7% from the previous week's market close. On Friday, Jeffries published new coverage on Unity and upgraded its rating on the stock from hold to buy. Unity's share price also got a boost from bullish momentum for the broader market over last week's trading. The S&P 500 index ended the week up 1.9%. Jeffries released a new note on Unity stock before the market opened on Friday, upgrading its rating on the stock to buy and raising its one-year price target from $22 per share to $29 per share. The investment firm sees signs that Unity's new Vector digital advertising is gaining traction and will help accelerate a turnaround for the business. Vector is using artificial intelligence (AI) to provide better ad targeting for games and applications built on Unity's development platform, and the company is positioning the new software as a key pillar of its comeback strategy. On the one hand, Unity is still in the relatively early stages of its turnaround effort, and the company could continue to see soft sales performance this year as it rolls out Vector and transitions customers to the platform. On the other hand, Jeffries thinks Vector will help power accelerating sales growth next year and beyond. If the new software helps reposition the company as a stronger player in the app advertising market, Unity stock could climb well above current levels. It's too early to say whether that will be the case, but the stock could deliver big upside for risk-tolerant investors. Before you buy stock in Unity Software, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Unity Software wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Keith Noonan has positions in Unity Software. The Motley Fool has positions in and recommends Unity Software. The Motley Fool has a disclosure policy. Why Unity Software Stock Skyrocketed This Week was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16 minutes ago
- Yahoo
Are Pandemic-Era Shopping Shortages Returning? 3 Reasons To Stock Up Now (And 3 Not To)
As tariffs impact global trade routes, some consumers worry that store shelves could soon resemble the early days of the COVID-19 pandemic — bare and unpredictable, and possibly hard on the budget. Learn More: Find Out: Earlier this year, a growing number of U.S. consumers said they were stockpiling goods in anticipation of rising prices. 'I'm buying double of whatever — beans, canned goods, flour, you name it,' Thomas Jennings, a shopper in New Jersey, told a Reuters reporter as he prepared for potential price hikes and shortages. While prices have dominated recent headlines, delays in shipping and customs backlogs are quietly creating stock shortages in key sectors. And, although President Donald Trump's tariffs were recently declared unlawful by the Court of International Trade, they were quickly temporarily reinstated. The Trump administration is also pushing back in an attempt to implement the tariffs, leaving their fate unknown for now. Are pandemic-era shopping shortages returning? Here are three reasons to stock up now and three reasons not to. If the tariffs do stick around, here are the reasons you might want to start stocking up. Read Next: Shane Lucado, founder and CEO of InPerSuit Inc., a legal technology company, said consumers should watch for signals in logistics contracts and freight indexes. 'When companies start renegotiating delivery terms mid-year, something big is shifting,' Lucado said. 'Freight delays plus tariff spikes mean manufacturers hedge risk by cutting supply. That ripples into job cuts, stock adjustments and vendor shakeups.' Josh Fischer, vice president of product strategy at Cin7, an inventory management platform, said Chinese imports will be hit the hardest. 'This is going to impact several specific industries, such as electronics, apparel, footwear, auto parts, toys, and sporting goods,' Fischer said. 'The good news is that these aren't the types of products consumers are buying every day. But this will impact seasonal spikes in purchases.' Baby furniture and European goods are current examples of accessible but vulnerable inventory. 'Purchasing baby furniture is the smartest move right now,' said Johanna Bialkin, CEO of Aldea Home & Baby. 'Gliders, cribs and dressers, especially from Europe, are still in stock and still at a good value right now. We are expecting the tariffs in the EU to drive up demand and pricing.' Panic won't do you any favors, so make sure you consider the reasons not to stock up before you hit the store. Acting out of urgency rather than need may leave consumers with items that don't suit their lifestyle or, worse, that they can't return. 'Sometimes people make decisions they regret, like buying a full-size stroller when you actually realize you want something lightweight,' Bialkin said. 'We love the process of education and will continue to leverage our 20 years of expertise to help our consumers buy when it is the right moment.' Unlike the pandemic, when supply disruptions unfolded gradually and predictably, today's potential trade-related shortages are harder to anticipate. Factors such as small business closures, volatile pricing and inconsistent trade policies make inventory gaps unpredictable and category-specific. Stockpiling everything 'just in case' could strain household budgets and storage space with little payoff. 'We saw a 44.8% spike in apparel sales during the week of March 31,' said Raj De Datta, CEO and founder of Bloomreach, an AI-driven personalization platform. 'That's consumers trying to get ahead of price hikes due to China-focused tariffs.' De Datta added, 'When tariffs hit basics, like a $100 shoe line suddenly costing $300, some retailers may pause entire product lines.' In times of uncertainty, it's natural to consider stocking up on essentials. However, financial experts caution against excessive spending that could jeopardize personal finances and encourage the use of credit cards for everyday purchases. 'Make sure you know where every dollar is going right now, because it's more important than ever to do so,' Thomas Nitzsche, a financial educator at the nonprofit Money Management International (MMI), told NBC10 Boston. He explained, 'When you see $10 for a dozen eggs, it is really a wake-up call. If it is something you know you'll need, you want to buy now, feel free. But just use caution, because if you finance it, you really got to do the long-term math on that to see, is this really going to make sense? Am I going to end up paying more in interest than I would have saved if I just waited?' Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) This article originally appeared on Are Pandemic-Era Shopping Shortages Returning? 3 Reasons To Stock Up Now (And 3 Not To)
Yahoo
22 minutes ago
- Yahoo
Forget tariffs, here's why CEOs worry about a looming recession
Forget tariffs, here's why CEOs worry about a looming recession originally appeared on TheStreet. Tariffs are on the tip of many Americans' tongues, thanks to the multifaceted trade war in which U.S. President Donald Trump has used foreign taxes as a key negotiating tactic against foreign economic rivals. While Trump says he loves everything about tariffs, including the word itself, the rest of the world's business leaders don't share his affinity. Global stock markets certainly hate the trade war. Every time a new tariff is announced, foreign and domestic markets fall. Every time Trump announces a deal has been reached, markets rise, even if no concrete deals are ever moreso than investors, Trump's tariffs place business leaders in a most awkward position. Businesses love predictability. Knowing what to expect and when to expect it allows them to plan for the future and forecast expectations. However, Trump's on-again, off-again tariffs have had the opposite effect, casting doubt on what businesses will have to pay their suppliers quarterly, monthly, or even weekly. This environment has, understandably, had an adverse effect on CEO confidence, as reflected in the latest survey data from The Conference Board. Every quarter, The Conference Board releases its Measure of CEO Confidence in collaboration wth The Business Council. Over 130 CEOs participated in the Q2 survey between May 5 and May 19, and the results are concerning. A reading below 50 indicates a negative outlook. The confidence index fell by 26 points to 34, the lowest level recorded since Q4 2022. 'All components of the Measure weakened into pessimism territory,' said Conference Board's Senior Economist of Global Indicators Stephanie Guichard.'Expectations for the future also plummeted, with more than half of CEOs now expecting conditions to worsen over the next six months, both for the economy overall and in their own industries.' The overwhelming majority of CEOs (83%) said they expect a recession in the next 12 to 18 months, nearly matching the rate reached in late 2022 and early 2023. While tariffs and trade issues were near the top of the list of concerns, geopolitical concerns were the number one concern. Geopolitical instability surpassed cybersecurity, 'which dominated CEOs' concerns over the past two years,' but dropped to fourth this year. However, the forecast from the top 1% isn't all doom and gloom. Most CEOs anticipate no change in the size of their workforce over the next 12 months. So while they expect hiring to be stagnant, they aren't anticipating any layoffs. The share of CEOs expecting to expand their workforce fell slightly to 28% from 32% in Q1. The share of CEOs planning to reduce their workforce rose 1% to 28%. 'Still, consistent with more pessimism about the outlook in their own industries, the share of CEOs expecting to revise down investment plans doubled in Q2 to 26%, while the share expecting to upgrade investment plans dropped 14 ppts to 19%,' said Business Council Vice Chairman Roger W. Ferguson. Part of the reason employers are confident in the labor market is that they currently aren't having trouble finding qualified candidates. Since there's less competition, the share of CEOs planning to raise wages by 3% or more over the next year dropped to 5% from 71% in Q1. While the future is murky for many CEOs, the present is almost equally disorienting. The percentage of CEOs who say that economic conditions are worse now than they were six months ago jumped 11% to 82% in Q2. Only 2% of respondents felt economic conditions were better. This change in sentiment is also reflected in the 69% of CEOs who said conditions in their own industries were worse than six months ago, a dramatic increase from 22% in Q1. Only 7% said conditions improved in their industries, and there was also a significant drop from 37% in tariffs, here's why CEOs worry about a looming recession first appeared on TheStreet on May 31, 2025 This story was originally reported by TheStreet on May 31, 2025, where it first appeared. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
