ProShares UltraPro Short QQQ (SQQQ) Covered Calls

ProShares UltraPro Short QQQ (SQQQ) is a leveraged inverse exchange-traded fund that seeks to provide three times (300%) the inverse daily performance of the Nasdaq-100 Index. The fund utilizes financial derivatives, primarily swaps and futures contracts, to achieve its bearish objective. Designed for sophisticated traders, SQQQ serves as a tactical tool for profit during tech-sector declines or as a short-term hedge against market volatility, though it is subject to high decay risks.

You can sell covered calls on ProShares UltraPro Short QQQ to lower risk and earn monthly income. Born To Sell's covered call screener gives you customized search capabilities across all possible covered calls but here are a couple of examples for SQQQ (prices last updated Tue 4:16 PM ET):

ProShares UltraPro Short QQQ (SQQQ) Stock Quote
Last Change Bid Ask Volume P/E Market Cap
72.96 +0.23 72.77 72.79 71.0M - 0.5
Covered Calls For ProShares UltraPro Short QQQ (SQQQ)
Expiration Strike Call Bid Net Debit Return
If Flat		 Annualized
Return If Flat
Feb 20 73 2.05 70.74 2.9% 265%
Mar 20 73 5.90 66.89 8.8% 100%
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ProShares UltraPro Short QQQ (SQQQ) is a specialized inverse ETF designed to deliver triple the inverse (-3x) daily performance of the Nasdaq-100 Index. Managed by ProShares and launched in 2010, it is one of the most widely used tactical instruments for investors with a bearish short-term outlook on the technology and growth sectors. Because the fund resets its exposure daily, it is engineered for short-term trading rather than long-term investment.

Core Strategy and Composition

SQQQ does not short stocks directly. Instead, it creates a "synthetic short" position through a complex portfolio of derivatives:

  1. Leveraged Inverse Exposure: The fund uses total return swaps with major financial institutions and Nasdaq-100 futures to replicate a -300% daily return on the index.
  2. Underlying Index: It tracks the Nasdaq-100, which is composed of 100 of the largest non-financial companies, meaning SQQQ rises when mega-caps like Apple, Microsoft, and NVIDIA decline.
  3. Daily Rebalancing: At the end of each trading day, the fund adjusts its derivative positions to maintain its -3x leverage for the next session. This daily reset is what creates path dependency and "volatility decay."
  4. Cash Management: A significant portion of the fund's assets is held in U.S. Treasury bills and cash equivalents to serve as collateral for its derivative obligations.

Competitive Landscape

SQQQ is a staple in the high-volume ecosystem of leveraged ETFs. Its most direct "opposing" peer is the ProShares UltraPro QQQ (TQQQ), which provides 3x bullish exposure to the same index. Traders looking for bearish exposure to other major indices often use the ProShares UltraPro Short Dow30 (SDOW) or the Direxion Daily Small Cap Bear 3x Shares (TZA). For small-cap bullish sentiment, the Direxion Daily Small Cap Bull 3x (TNA) is a common alternative. Investors seeking inverse tech exposure with less aggressive leverage may opt for the ProShares Ultra Short QQQ (QID), which offers -2x leverage.

Strategic Outlook and Risk Factors

The outlook for SQQQ is strictly tactical, thriving during periods of sustained downward pressure on growth stocks or rapid "risk-off" market rotations. A critical risk is compounding decay; in a choppy or sideways market, the fund can lose value even if the Nasdaq-100 is unchanged over several weeks. Furthermore, the long-term upward bias of the equity markets means that SQQQ has historically undergone multiple reverse stock splits to maintain a tradeable price. For 2026, activity remains high as traders use SQQQ to hedge against interest rate uncertainty and potential "AI-bubble" corrections. Due to its extreme volatility and the high cost of the 0.95% expense ratio, it is considered a high-risk tool requiring constant monitoring.