Nasdaq 100 options trade targets new QQQ high by month-end

A trader spent $24 million on a Nasdaq 100-linked options structure Thursday that would benefit from a fresh high in the Invesco QQQ Trust ETF by the end of July, according to CNBC. The position, the largest single QQQ options trade of the session and the third-largest options trade across the market that day, stood out in an index that has been broadly rangebound since mid-May.

The trade was built through a three-part call spread expiring July 31, CNBC reported. Its largest component was the purchase of 28,000 calls with a $736 strike, costing about $30 million, executed roughly 90 minutes after the opening bell.

At the same time, the trader sold about $6 million of a $730/$740 call spread with the same expiration, CNBC said. That sale reduced the upfront cash outlay, while lifting the level at which the combined position starts to make money to around $750, less than $2 above QQQ’s early-June high.

How the options structure works

A call option gives its buyer the right, without the obligation, to buy the underlying security at a fixed strike price before expiration. A call spread uses more than one call option, typically combining purchases and sales at different strike prices, to adjust cost, risk and payoff.

In this case, the structure points to a view that QQQ needs to move materially higher over a short period for the trade to work as designed. QQQ was quoted by CNBC at $722.86, up 1.61%, at 3:37 p.m. EDT Thursday.

Scott Bauer, chief executive of Chicago-based Prosper Trading Academy, told CNBC that if the trader did not hold another offsetting position, the wager required a sharp advance in QQQ. “The spread reduces his cost but pushes up the level for the breakeven. If the index just grinds he’s going to get killed,” Bauer said.

The Nasdaq 100 has been effectively unchanged since May 14, despite swings over that period, CNBC reported. The index last set a high on June 3, while much of the options activity has clustered around the $710 level, according to ThinkOrSwim data cited by CNBC. The S&P 500, meanwhile, has traded inside an approximately 200-point band since early May.

Position may not be a pure new bullish bet

CNBC noted that open interest in the $736 calls matched the size of the trade when it was executed. That can suggest the trader may have been closing or buying back previously sold calls, rather than initiating a new long position. Even under that interpretation, CNBC said the activity would be consistent with a neutral-to-positive stance on the index.

Across QQQ options, $1.6 billion changed hands Thursday, with $944 million tied to calls, according to SpotGamma data cited by CNBC. ThinkOrSwim data suggested buying and selling were closely balanced, with nearly the same number of contracts bought and sold in both calls and puts.

Other large trades also drew attention. In the SPDR S&P 500 ETF Trust, known as SPY, a trader bought 2,000 deep in-the-money $500 calls expiring July 24 for $50 million, CNBC reported. In Oklo, the nuclear company whose shares were trading near $50, a trader bought $46 million of $200 calls expiring in January 2028 and $21 million of $90 calls expiring in mid-December, according to CNBC.

This story draws on original reporting from CNBC.