Options Traders Flock to QQQ During Tech Earnings Season

The options can offer investors protection if earnings of a stock are disappointing.

Reviewed by: Lisa Barr
Edited by: Ron Day

The Invesco QQQ ETF was inundated with options bets Tuesday as investors watched the tech earnings announcement season unfold and took both speculative and hedge positions depending on their needs.  

Options contracts skyrocketed in the tech-focused exchange-traded fund, with 4.7 million traded on Tuesday. The Wall Street Journal first reported that this was the highest number on record for the ETF. Investors use options to speculate and hedge against an ETF, and both are likely happening, according to etf.com Senior Analyst Sumit Roy. 

QQQ, which has roughly $211 billion in assets under management, tracks the Nasdaq-100 index. The fund’s top holdings are Apple, Microsoft, Amazon and Nvidia. Year to date, the fund is up 41% and has registered inflows of about 3.8 billion, according to etf.com data. 

Tech Earnings Season Continues 

» As the release of tech earnings continues, traders are watching QQQ, as some companies flourish and others miss targets. Options contracts give the buyer the right to buy or sell the ETF at a given price point in the future, so both potential buyers and sellers are piling bets on the tech industry’s movement. 

“The spike in options volume for QQQ reflects some investors’ growing appetite for risk as the market has rallied—but it also reflects other investors’ caution with megacap tech stocks near all-time highs,” said Roy.  

A handful of tech stocks have driven the stock market rally that made the Nasdaq’s past six months the best in decades. But not everyone is confident the AI boom that drove stocks like Nvidia to new heights will continue to prop up the sector.  

Major tech earnings announcements are driving both investor anticipation and stock movements. Apple Inc. reported on Aug. 3 that the firm was losing revenue for the third straight quarter, yet its streaming business was boosting the firm. 

The  iPhone maker's third-quarter sales were down 1.4% compared with the year-ago quarter, as it missed analyst expectations of $40.2 billion by about half a billion dollars. Apple stock was down 3% after the news on Friday.  

Yet Amazon.com Inc., which reported stronger-than-expected sales, saw its price jump 9.6% Friday.  

Lucy Brewster is a finance reporter at etf.com. Before joining, she was a finance fellow at Fortune covering investing strategy, markets and venture capital. Brewster is a graduate of Vassar College.