Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

US500Indices

Trade idea: short US500/long NAS100

Chris Weston
Chris Weston
Head of Research
Apr 7, 2021
Trading Views's charts have been used to divide one index by another – in this case the S&P500 is the numerator and the NAS100 the denominator.
Source: Trading View

With US Q1 earnings in mind (read our preview here), one interesting trade for those who feel tech is going to outperform the S&P500 is to look at ratio analysis. Here, I’ve used Trading Views's charts, and the ability to divide one index by another – in this case the S&P500 is the numerator and the NAS100 the denominator – the fact the ratio is headed lower details that the NAS100 is outperforming the S&P500. I can trade this by taking a long position in the NAS100 and short in US500, making sure the USD notional exposure is the same.

As we see the ratio is starting to roll over and the expectation is tech earnings will be strong - if married with lower US bond yields should see this trade work.

Ready to trade?

It's quick and easy to get started. Apply in minutes with our simple application process.

Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information provided here, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.