Check Out This Option Flow!

Today’s price action is pretty nuts.

The NDX is pulling every major index green…

Meanwhile almost every other sector outside of Tech is getting spanked.

This is why the VIX is up with the market.

Interesting, smart money might have set up a serious bet thats showing a HUGE reward to risk ratio about how the NDX/QQQ could turn around quickly.

Take a look at the Call to Put ratio in QID:

Recall QID is the DOUBLE SHORT QQQ.

(This means that if the QQQ is down 1%, the QID’s target is up 2%.)

Normally calls outpace puts, but today’s action is pretty significant with over 18,000 calls trading to just 250 puts.

The big trade is a pretty aggressive call spread.

A customer bought 8,000 of the October 11 calls.

The same customer then went and sold 4,000 of the 13 calls and 4,000 of the 14 calls.

This is essentially the same as having a QID October 11-13.5 call spread.

That would be a 20%-30% move in this name!

Not like a Corona Virus crash overnight, but given the timing, this customer seems to think QQQ could be pretty dang soft AFTER labor day.

An early September sell off would align nicely with this trade:

I also like that it is cheap.  The trade only costs $.29 and $.35 respectively

This would make the ‘synthetic’ 11-13.5 call spread about $.32…

That’s about 8 to 1 risk reward.

Not a bad little play on the NDX getting softer.

Be on your toes.

Your Only Option,

Mark

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