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Mike Khouw spoke on
CNBC's Options Action about an options trade in
PowerShares QQQ Trust, Series 1 (ETF)QQQ that he noticed on Wednesday.
He said that a trader sold 17,000 contracts of the August 109 call options for $2 to buy 34,000 contracts of the August 101/96 put spread for a premium of $1. The total net premium paid is zero and the trade is going to make a profit if the stock drops below $101 at the August expiration. It can maximally make $5, if
PowerShares QQQ Trust, Series 1 (ETF) drops to $96 or lower at the August expiration.
Khow added that this trade is probably a hedge for a long position in
PowerShares QQQ Trust, Series 1 (ETF).
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