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NASDAQ

The home of the NASDAQ-100 Index and the primary exchange for the NASDAQ-100 Index Tracking Stock is the NASDAQ Stock Market.

 

Component Stocks

For detailed information on the NASDAQ 100 component stocks, including prices, charts and analysis.
 
:: Advantages

First, by trading Indexes, you are essentially trading the range of the market made up of the Index's component stocks rather than an individual equity. So if you want to participate in the movement of the market itself, Index Funds are a simple way to do so.

 

Second, because Indexes cover a broad range of stocks (500 in the case of the S&P 500, 100 in the case of the NASDAQ 100 and 30 with the DOW) they are less volatile - an adverse earnings report from one component company won't necessarily be reflected by a sharp movement in the index, even if that company's price does fluctuate substantially because of the news. 

 

Third, they offer an excellent way of diversifying your trading - by subscribing to different advisors, some who specialise in indexes and others who trade equities, you are spreading your risk not just from advisor to advisor, but from one market to another. 

 

 

 

 

 

NASDAQ 100
 

The NASDAQ-100 Index includes 100 of the largest non-financial companies listed on the NASDAQ Stock Market based on market capitalization.
 
:: Industry Groupings*
Technology approx. 56%
Consumer Services approx. 19%
Health care approx. 13%
Industrials approx. 6%
Consumer Goods approx. 3%
Telecommunications approx. 2%
Other sectors approx. 1%
 
:: The NASDAQ-100 Trust 

The most popular way of trading the NASDAQ Index is via the NASDAQ-100 Tracking Stock, whose ticker symbol is QQQQ. When you purchase this stock, you're actually investing in the NASDAQ-100 Trust, Series 1, a unit investment which holds shares in the companies listed on the NASDAQ-100 Index.

 

The Trust was established on March 4,1999 (with a mandatory termination date in 2124) for the purpose of matching the price and yield performance of the NASDAQ-100 Index. It does this by holding all of the stocks in the Index and, as the composition of the Index changes, the Trustee (the Bank of New York) replicates those changes in the portfolio of Index securities held by the Trust.

 

The Trust then issues shares in what are termed "Creation Units" comprising 50,000 shares at a time, and it is these shares which trade as the NASDAQ-100 Index Tracking Stock under the QQQQ symbol. Each share represents an ownership interest in the Trust, which in turn gives the holder of the share an ownership interest in each of the 100 companies making up the Index.

 

Because it trades just like any other stock, QQQQ can be bought and sold in the same way. This is the point of it being an Exchange Traded Fund - it is listed and trades on its exchange (the NASDAQ) just like a company's stock would.

 
:: QQQQ Options

Because the NASDAQ-100 Tracking Stock trades like any other stock, it also has options available on it, just like any other optionable stock. Both puts and calls are written, and these then form the basis of all other option trading strategies. The multiplier is also the same - one option contract covers 100 shares of the underlying Tracking Stock. So the cost per contract is also calculated in the same way - 100 times the quoted premium.
 
:: Liquidity

One of the great attractions to the options trader of the QQQQ is its liquidity - currently there are approximately 502 million outstanding shares, it has an average option open interest of nearly 9 million and trades close to 400,000 options a day. Compare that with a company like Microsoft which has nearly 11 billion outstanding shares, an average option open interest of just over 4 million and an average daily option volume of just under 80,000.

 

Diversification is also a factor - as with the various other Index stocks, you are able to trade in an investment instrument that is less susceptible to company-specific developments.
 
:: Mutual Funds

 As with the DOW, it is also possible to trade the NASDAQ Index through third party mutual funds. Those provided by Rydex and ProFunds are:

 

Rydex Symbol* Type
OTC RYCOX MUT
Dynamic OTC RYCCX MUT
Inverse OTC RYACX MUT
Inverse Dynamic OTC RYCZX MUT
     
ProFunds Symbol Type
OTC   MUT
UltraOTC   MUT
Short OTC   MUT
UltraShort OTC   MUT
     

*Class C Shares

    

* Source: : NASDAQ