The recent market rebound helped one group of stocks in particular—technology. And according to one trader, the rally isn't finished.
After a brief swoon, the has bounced back 1.8 percent in the past two days. But the ETF tracking the tech-heavy Nasdaq-100 (trading under the symbol QQQ) did a bit better, returning 2.2 percent during that time.
Earlier this week, he placed a bullish put spread where he sold the 109-strike puts while simultaneously buying the 108-strikes. Both options expire Friday. Since a put gives the purchaser the right to sell a stock at a specific price within a set time frame, that bullish put spread maximizes profits if shares reach the higher strike price. The QQQ opened at $109.85 on Thursday.
Based on his chart work, Gordon sees a two-month uptrend holding, even with the selloff earlier this week. He expects the QQQ to test resistance at $111.
"I believe we're going to break through that level and continue to the upside," said Gordon.
With that in mind, Gordon is once again placing a 108/109 bullish put spread. By selling the 109-strike puts higher than the purchase price of the 108-strike puts, Gordon is taking in 33 cents for each pair of put and calls or $33 per contract.
If Gordon is right, he will be able to keep that money by next Friday. Using Fibonacci ratios popular with technical analysts, he foresees a rally in the next few days.
"We could get up to just over $112 on the topside in the next five to 10 trading days," Gordon said.
The QQQ's record highs of $111.16 were set on April 27.
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