BofA Has Options Play to Bet on Tech Rally as Hedge Funds Sell

Core Insights - Caution is emerging around high-flying tech shares, but this is making options cheaper for betting on further gains in these stocks [1][2] - Hedge funds have recently sold tech shares at the fastest pace since early August while investing in value sectors like banks [2] - Despite a 45% rally in tech stocks since early April, Bank of America strategists believe the potential for further gains exists, suggesting a six-month call spread on the Invesco QQQ Trust Series 1 ETF [3][5] Investment Strategies - Bank of America advises investors to consider out-of-the-money QQQ call spreads with a six-month tenor, which could yield significant profits if tech stocks advance [4] - Historical analysis shows that extreme over-valuation periods have produced average gains of 244%, indicating that the current tech rally may have more room to grow [5] Market Sentiment - The cost of hedging against a 10% decline in the QQQ ETF has been increasing, suggesting that traders are cautious about significant price movements [6] - The tech trade is becoming more selective, with investors focusing on specific stocks rather than the broader tech sector [7]