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Thursday, December 20th 2018

Are Investors Turning to QQQs for Protection?

Are Investors Turning to QQQs for Protection?

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Summary

ORATS has found that skew measurements between SPY and QQQ are almost equal, indicating that options investors are buying more puts in QQQs than in SPY for protection.

The perennial favorite in put protection, SPY is being challenged by tail risk upstart QQQ. The ORATS measurement of skew has been falling in SPY recently and rising in QQQ to where the two measurements are almost equal.

Skew measures the relationship between put and call implied volatility explained HERE.  As options investors buy puts the implied volatility and the skew increases. This appears to be happening in the QQQs of late more than in SPY.

Download an explanation about skew and ORATS data HERE

Watch a video about skew here: API analyze skew in ETFs: http://screencast-o-matic.com/watch/cD1UoCittf

Watch these other videos: Option Markets and Analytics https://screencast-o-matic.com/watch/cblUoE2Wgu

 

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The opinions and ideas presented herein are for informational and educational purposes only and should not be construed to represent trading or investment advice tailored to your investment objectives. You should not rely solely on any content herein and we strongly encourage you to discuss any trades or investments with your broker or investment adviser, prior to execution. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. Option trading and investing involves risk and is not suitable for all investors.

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The opinions and ideas presented herein are for informational and educational purposes only and should not be construed to represent trading or investment advice tailored to your investment objectives. You should not rely solely on any content herein and we strongly encourage you to discuss any trades or investments with your broker or investment adviser, prior to execution. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. Option trading and investing involves risk and is not suitable for all investors. For more information please see our disclaimer.
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