The QQQ is an ETF (Exchange Traded Fund) which affords investors an opportunity to invest in the Nasdaq 100. The Nasdaq 100 is the top hundred stocks that trade on the Nasdaq Marketplace. The QQQ Exchange Traded Fund is essentially a mutual fund that tracks the stocks in the Nasdaq 100. A leading benefit of an Exchange Traded Fund (ETF) is that an ETF does not charge the management fees and all the additional fees commonly charged to mutual fund bearers.
The QQQ is the most actively dealt security in the United States. The symbol was lately altered to QQQQ therefore it would have 4 characters and trade on the Nasdaq rather than the NYSE. Although the symbol switched, it's nevertheless established upon the same thing. Mostly everyone still names it the QQQ, it just trades as the ticker symbol QQQQ.
Because the QQQ is handled the same way as a stock, you're now allowed to trade options on it also. Traders are currently earning a living trading call and put options on the QQQ. These were previously unavailable because the only means you were able to trade the Nasdaq 100 was with futures contracts. Few traders were familiar with the futures exchange, and consequently stayed distant from them. Because you're currently allowed to trade options on the QQQ, you are able to also apply whatever of the option trading strategies that were generally solely applied on stocks. A few of the more common option trading strategies are covered calls, ratio backspreads, bull put spreads, bear call spreads, iron condors, butterflies and any other strategies that require a combination of stocks and options.
Covered Calls are perhaps the most common option strategy to average investors. They are a process to return a monthly profit from stocks that you have. Here is a really elementary explanation of a covered call: You possess 100 shares of the QQQ. Option contracts are exclusively traded in 100 share increments. Because you possess 100 shares you are able to sell a contract to sell the QQQ to another trader at a assigned price in the future. You commonly sell the contract at a greater price than the stock is trading. If the stock does not proceed to go up, the trader will not purchase the stock from you, however you get to keep the profit that you received when you traded the contract.
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Many retail traders use covered calls to generate income. It is highly conservative and therefore widely popular. In fact, many stock traders begin trading options this way.
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