Nishant Pant Recommends 40-Day QQQ Put Spreads After 4.8% ETF Drop
Updated
Updated · CNBC · Jun 9
Nishant Pant Recommends 40-Day QQQ Put Spreads After 4.8% ETF Drop
1 articles · Updated · CNBC · Jun 9
Summary
A 4.8% one-day slide in QQQ and options losses of 30%-60% prompted Pant to outline a hedge he has used for more than a year: a put spread that limits downside while cutting protection costs.
The setup buys a put about 3% below QQQ and sells another about 8% below with roughly 40 days to expiry; with QQQ near $705, that translates to a July $685/$650 spread.
Pant says he opens new hedges only when VIX is below 20—ideally 13-16—then sizes contracts to his portfolio's long-delta exposure and pays closer attention when seasonality or overbought RSI readings raise pullback risk.
In one example, a QQQ 725/690 spread opened for $5.50 per share when VIX was 15 more than doubled on June 5, hitting an $8.25 exit for a $275 per-contract gain that offset part of a $1,000-$1,500 loss in call spreads.
His 12-month review found 12 separate QQQ declines of at least 2% over seven trading days, arguing that even in bullish markets, regular pullbacks make recurring hedge costs worthwhile.