Nasdaq Down Nearly 5%, Still Holding Steady: Half the Market, Half the Options

Friday's selling carried straight into Monday. $Invesco QQQ Trust(QQQ.US) fell 3.47%, then another 1.36%, and is now more than 10% below its October high. $Intel(INTC.US) and $AMD(AMD.US) each lost more than 7% on Monday.

Tuesday brought a bounce. The Nasdaq 100 rose 0.7%, chip stocks recovered about 3%, and AMD's earnings beat sent the stock up more than 5% after hours.

Is the selling over? One green day isn't enough to say. Two things are worth a closer look first.

It's tech that's falling. The broader market is holding up

Tech slid through October while consumer staples, healthcare and financials climbed. The money hasn't left the market. It's just being more selective.

$Invesco S&P 500 Eq Wgt ETF(RSP.US) gives every S&P 500 stock the same weight, so it shows the market as a whole more clearly. In Friday's sharp sell-off it dipped only 0.79%. On Monday, as the Nasdaq kept falling, it rose 0.76%. Tech is down, but market breadth has improved: more stocks are rising, and most are holding steady.

Some investors bought insurance a while ago

Plenty of shareholders already hold a put against their stock. As we've said before, buying a put is like buying insurance. If the share price falls, the put pays back part of the loss.

Take someone holding $NVIDIA(NVDA.US) with a put attached. Over Friday and Monday, that put moved into profit.

So what should they do with it?

It expires this month, but the calendar is still busy. Midterm results are coming in today Singapore time. Apple slid another 1.9% on Tuesday after its guidance missed expectations. The VIX is still above 20. One green day doesn't clear the risks ahead.

That's why many are choosing to roll and push their protection a bit further out.

Rolling means swapping before expiry

A roll replaces the option you hold with another contract on the same stock.

Holding shares with a put? Swap it for one that expires a month later and keep the cover going.

Bought calls betting on a rebound, now underwater and close to expiry? Roll them out and give your view more time.

Bearish puts already in profit? Roll down to a lower strike. Bank the difference now and keep a position in case the slide continues.

On Longbridge, it's one order

Rolling used to take two orders. If you close the old contract first, the new one's price can move in the seconds between orders. If you open the new one first, margin is charged on both, which a tight account may not cover.

Longbridge's new Roll feature combines closing and opening into a single order, filled at the same moment. Margin is based on the net change after the roll, and the order screen shows upfront whether you'll pay or receive premium.

How to roll on Longbridge

Go to Portfolio, tap your option position, and choose Roll from the action bar.

The contract you're closing is already filled in under Sell to close. Pick the new contract from the option chain, and it appears under Buy to open. The buy/sell direction is matched automatically: long positions sell to close and buy to open, short positions do the reverse. Only contracts on the same underlying are available.

For someone holding NVIDIA with a put, rolling out one month keeps the coming earnings and data releases inside the protection window. What used to take two orders now takes one tap.

Current limitations

Single-leg rolls only. In a multi-leg position you can roll one leg, but the combo will be split into separate positions. Rolls are available during regular trading hours only, and orders are good for the day. A market order is rejected if there's no quote on the book, so use a limit order instead.

Disclaimer: The examples above are for educational purposes only and do not constitute investment advice or a recommendation of any kind. Strike prices and expiry dates mentioned are hypothetical and serve only to illustrate how the strategy works. Please choose option parameters that suit your own risk tolerance, market conditions and specific needs. Investing involves risk. Please trade with care.

$Invesco QQQ Trust(QQQ.US) $Invesco S&P 500 Eq Wgt ETF(RSP.US) $NVIDIA(NVDA.US) $AMD(AMD.US) $Apple(AAPL.US)