Skeptics Dominate Nasdaq ETF Options on Bets Dollar Eats Profits
By Callie Bost and Annelise Alexander
Options traders, convinced technology shares are in a precarious position ahead of earnings season, are paying up for insurance in the event stocks fall from a 15-year high.
Bearish options on the Powershares QQQ Trust Series 1 exchange-traded fund, which tracks the Nasdaq 100 Index, are the most expensive in three years relative to bullish ones, according to data compiled by Bloomberg. The Nasdaq 100 has gained 6.9 percent this year, compared with a 2.4 percent rise in the Standard & Poor?s 500 Index.
Speculators are wary as a strong dollar and turmoil in Chinese stocks threaten the technology industry?s profits. Intel Corp. said Wednesday it expects the personal-computer market to fall further than expected, spotlighting challenges for semiconductor companies amid slowing demand for PCs and their components.
?The options market suggests uncertainty remains high as we approach earnings,? said Kurt Ayling, a technology, media and telecom analyst at New York-based Susquehanna Financial Group LLP. ?With skew elevated, the cost of protection won?t come cheap.?
The fund, known by its ticker QQQ, rose 0.7 percent to $111.10 at 9:36 a.m. in New York, touching the highest level since March 2000. It has gained 1 percent since the end of May, even as semiconductor stocks just posted their worst month in three years.