With the comeback in technology stocks likely to fade, Barclays says investors may want to consider this options strategy.
With the comeback in technology stocks likely to fade, Barclays says it's time for investors to consider an options strategy that would capitalize on their decline. "We suggest buying put spreads on US Tech as its recent strength is unlikely to prove enduring," wrote analyst Anshul Gupta in a Tuesday note. Investors in recent week have flocked to tech stocks — particularly megacaps — as a safe haven amid the banking turmoil rattling markets.
6% so far this month But Barclays expects the recent tech outperformance to falter, viewing the sector as overvalued and trading at a premium to pre-pandemic levels. Given this backdrop, Barclays recommends fading this rally and betting that tech stocks will go down, using the Invesco QQQ Trust — which tracks the Nasdaq-100 index. The trade involves buying a put on the QQQ with a higher exercise price and selling one on the QQQ with a lower strike.
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