Option Trading In QQQ: 15 Things You Should Know
Last Updated on October 18, 2022
Options trading is popular, and especially retail traders enter the options market at market bottoms and tops.
We frequently receive questions about how to trade options, in both QQQ and SPY. We have previously covered options trading in SPY, and today we do the same for QQQ options trading. Below is a short summary of the most frequently asked questions about options trading in QQQ.
Are there options on QQQ?
Yes, the QQQ options market is huge. Thousands of contracts are traded each day. Moreover, it’s a wide variety of strike prices and future expiration dates. QQQ options are one of the most traded and the ETF itself is one of the oldest still trading.
How to day trade QQQ options?
Perhaps to your disappointment, we don’t have any recipe to day trade QQQ options profitably.
Day trading is hard – very hard. It’s tough in stocks and futures, but even harder in trading due to more professional players than in stocks (for example).
(We have a day trading course, but that is mainly for stocks and futures.)
Day trading is, in practice, a zero-sum game, and derivatives (like options) are a 100% zero-sum game.
We believe day trading QQQ options is a bad idea for 99.9% of all traders.
How do you master QQQ options?
You need to have a plan and you need to have a full understanding of how options are priced, both in theory and in practice.
Most don’t even reach the starting line because they don’t fully understand all the nuances with options (delta, gamma, vega, etc). If you don’t know the theory, how are you going to make money?
Predicting the correct market direction of the underlying security might not be enough to offset time decay, either. Do you know the effects of time decay? If not, you’ll end up losing (in the long run).
The most important thing is to have a trading plan. What are you going to trade? Why are you going to trade? What is your strategy?
The most important is to have a statistical trading edge. The only way to find out if you have a statistical edge is to backtest (what is backtesting?) If you are new to trading and backtesting, you might be interested in our inexpensive backtesting course:
QQQ options settlement time?
As an options trader, you don’t need to be concerned about the expiration date.
However, according to NASDAQ, the expiration time is:
The time of day by which all exercise notices must be received on the expiration date. Technically, the expiration time is currently 11:59 a.m. [Eastern Time] on the expiration date, but public holders of option contracts must indicate their desire to exercise no later than 5:30 p.m. [Eastern Time] on the business day preceding the expiration date.
Can you trade QQQ options 24 hours?
No.
You can trade QQQ for more or less 24 hours. CBOE Options Exchange offers 24-hour trading, but only for five days a week.
QQQ options, on the contrary, only trade from 8:15 to 04:15 ET.
Can you trade QQQ options after hours?
As indicated in the last FAQ, you can only trade options until 04:15 ET.
On what exchange trades QQQ?
The QQQ is listed on Nasdaq, but you can buy and sell via many electronic exchanges.
What is the QQQ Wheel strategy?
The QQQ Wheel strategy is a very simple strategy or system where you constantly sell QQQ puts and receive the premium. This has theoretically been shown to beat the index, but keep in mind that it involves taxes (unless deferred), commissions, and slippage.
Please read our older articles:
How are QQQ options taxed?
Taxes on QQQ are sourced to the country where you reside. If you reside in Sweden, Sweden might tax your profits – depending if you have a tax-deferred account or not.
The best strategies can be found in our….
Strategy Shop
Backtested trading strategies
However, taxes are complicated and US citizens are liable to US taxes wherever they reside. Moreover, tax treaties might also dictate where you should pay taxes. We recommend using a tax advisor if you are uncertain, even though they are terribly expensive to consult.
What time do QQQ options start trading?
Most of the trading is done during regular trading hours: 0930-1600 Eastern time.
When did QQQ options start trading?
QQQ started trading on the 10th of March 1999. It’s one of the oldest ETFs still around. (The oldest is SPY.)
QQQ options started trading in 2001.
What time do QQQ options expire?
QQQ options expire quarterly, monthly, and weekly.
Can you swing trade QQQ options?
Of course, you can swing trade options, but our comments made earlier in the article is also valid for swing trading options: It’s extremely difficult and most people fail to make any money.
Can you scalp QQQ options?
Yes, but then again, scalping is a waste of time and money. You are unlikely to make any money. You are competing against players that are much better capitalized and equipped than you are.
What are the QQQ options trading hours?
The QQQ options trading hours are from 0930 to 1600 ET.
Relevant options articles:
We have not covered options yet on this site, but you’ll get a good understanding by reading these two articles:
Final thoughts on options trading in QQQ
Options are complicated, and we advise retail traders to stay away from trading options unless you know very well what you are doing. The most important thing in trading is to have a statistical edge.
The options market is much more a market where institutions trade and hedge their positions. We believe you are better off trading stocks and futures.
If you still want to trade QQQ options, then make sure you spend a lot of time understanding the pricing and dynamics of options.