There continues to be upside call interest in QQQ (PowerShares QQQ, Expense Ratio 0.20%) with yesterday’s trading consisting of March 109 call buyers, and this activity reminds us of May 113 calls that traded back on 3/2/15 earlier this month.

While the March 109 calls have a short shelf life (they expire after tomorrow’s trading day) and are currently out of the money given QQQ’s $108 handle, the motivation here seems clear, that there is a belief in additional very short term upside in the Nasdaq-100.

QQQ has actually seen net outflows year to date, with the fund losing >$2.2 billion via redemption activity, but there have been occasions as we have noted where call buyers have entered
the market.

The May 113 call activity that we mentioned above that occurred several weeks back appears to be a bullishly positioned earnings season play on QQQ, given that the top ten holdings AAPL (>14.8%), MSFT (>7.1%), GOOG (>3.7%), AMZN (>3.4%), FB (>3.4%), INTC (>3.1%), GOOGL (>3.1%), GILD (>3%), CSCO (>2.9%), CMCSA (>2.5%) are all slated to report earnings within the expiration timeframe of these options.

Given the bullish options activity that has resurfaced in QQQ, it makes sense to closely monitor leveraged long Nasdaq-100 ETFs as well like TQQQ (ProShares UltraPro QQQ, Expense Ratio 0.95%) and QLD (ProShares Ultra QQQ, Expense Ratio 0.95%). Year to date, TQQQ has actually seen net outflows like QQQ (>$256 million out, $1.09 billion AUM) while QLD has seen a smaller amount leave the fund ($49 million, $1.11 billion AUM).

Given the nature of the Nasdaq-100 in which it is a market cap weighted index which traditionally happens to have a substantial weighting to the Technology sector (currently 56% of the index), QTEC (First Trust NASDAQ-100 Technology Sector, Expense Ratio 0.60%) may be an interesting ETF to further examine here as well given its strict concentration with the Technology sector portion of the NASDAQ-100, but where the holdings are managed in a modified equal weighted format.

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