27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The NASDAQ this week closed above the 5,000 level for the third time in history and is one big day away from hitting the highest level ever for the index. The rally has been fueled by a big move in Apple Inc. (NASDAQ: AAPL), but the top performers in the index over the last month are a plethora of relatively unknown names to most retail investors.
With that being said, it is time to look at some of the niche ETFs within the technology sector as investment opportunities. For example, the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ), which is heavily weighted in Apple, is up 21 percent over the last 12 months. There is a trio of niche ETFs that have greatly underperformed the broader index, and it may be time to start nibbling.
First Trust Dow Jones Internet Index ETF
The First Trust DJ Internet Index Fund (ETF) (NYSE: FDN) consists of 42 Internet-related companies that generate at least 50 percent of their sales/revenue from the Internet.
The top individual holdings include:
- Amazon.com, Inc. (NASDAQ: AMZN) at 8.2 percent
- Facebook Inc (NASDAQ: FB) with a 7.8 percent holding
- Priceline Group Inc (NASDAQ: PCLN) at 5.4 percent
The ETF is up 4 percent over the last 12 months, but a recent breakout to a new all-time level was a bullish signal for FDN.
If the ETF can hold $65.79 in the next week, it would be a confirmation of the breakout. The expense ratio is 0.57 percent.
First Trust ISE Cloud Computing Index ETF
The First Trust Exchange-Traded Fund II (NASDAQ: SKYY) is made up of 39 companies that are involved in the cloud-computing industry. To be included, the company must be actively involved in cloud-computing industry and have a market cap of at least $100 million.
The top individual holdings include:
- Netflix, Inc. (NASDAQ: NFLX) at 4.4 percent
- Brightcove Inc (NASDAQ: BCOV) making up 4 percent of the ETF
- Amazon.com coming in at 3.9 percent
The ETF is up 7 percent over the last 12 months and also hit a new all-time high this week. The support level to watch is $29.46, the high from late 2014. The ETF has an expense ratio of 0.60 percent.
Global X Social Media Index ETF
The Global X Funds (NASDAQ: SOCL) tracks the largest publicly-traded, social media companies around the word, with 50 percent of its holdings in the United States and 28 percent based in China.
The top individual holdings include:
- LinkedIn Corp (NYSE: LNKD) with a 14 percent holding
- Tencent Holdings Ltd at 12 percent
- Facebook making up 10 percent of the ETF
The ETF is down 16 percent over the last 12 months, as many of its international holdings have struggled. Unlike the prior two ETFs, SOCL trades well below its 52-week high; however, it has been forming a new uptrend in the last month. The ETF has an expense ratio of 0.65 percent.
If the NASDAQ rally continues, it will more than likely bring all sectors along with it, and the above niche ETFs could be a major beneficiary. Not only do they offer upside potential, they will also add diversification to a typical equity portfolio.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
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