Tech Trade Alert - (NVDA) November 16, 2018
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline.
Trade Alert - (NVDA) - BUY
BUY the NVIDIA (NVDA) December 2018 $130-$140 in-the-money vertical BULL CALL spread at $8.60 or best
Opening Trade
11-16-2018
expiration date: December 21, 2018
Portfolio weighting: 10%
Number of Contracts = 12 contracts
Well, that was some round trip!
I first recommended NVIDIA, top performing graphics card manufacturer and artificial intelligence leader, at $67 two years ago. After soaring all the way up to $294, $6 short of my $300 target, here we are back at $162.
The entire world was positioned for a great earnings report. We got a horrible one instead and lost 20% off the value of the company in the blink of an eye and now they’re throwing up on their shoes.
The long-term bull case for NVIDIA is still alive and well. The earnings shortfall was blamed on the complete loss of their cryptocurrency business, the result of the 72% swan dive by Bitcoin. However, supplying graphics card to crypto miners was never more than a tiny portion of their total business. Down 45.57% from the October high in six weeks is a huge overreaction and the deal of the century.
I am therefore buying the NVIDIA (CRM) December 2018 $130-$140 in-the-money vertical BULL CALL spread at $8.60 or best. Don’t pay more than $9.25 for the position or you’ll be chasing.
This is a bet that (NVDA) won’t fall below the $140 strike price by the December 21 option expiration in 29 trading days.
If you don’t trade options buy the stock. There is an easy double from here over the long term.
With the Mad Hedge Market Timing Index at 10, there is nearly a very high chance that this will be a successful trade.
Here are the specific trades you need to execute this position:
Buy 12 December 2018 (NVDA) $130 calls at………….………$41.00
Sell short 12 December 2018 (NVDA) $140 calls at………….$32.40
Net Cost:………………………….…………..………….….....$8.60
Potential Profit: $10.00 - $8.60 = $1.40
(12 X 100 X $1.40) = $1,680 or 16.27% in 29 trading days.
To see how to enter this trade in your online platform, please look at the order ticket above, which I pulled off of Interactive Brokers.
If you are uncertain on how to execute an options spread, please watch my training video on How to Execute Vertical Call and Put Debit Spreads by clicking here.
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Please keep in mind that these are ballpark prices only. There is no telling how much the market can move by the time you get this.
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The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you.
The difference between the bid and the offer on these deep in-the-money spread trades can be enormous.
Don't execute the legs individually or you will end up losing much of your profit. Spread pricing can be very volatile close to expiration.
If you don't get done, don't worry. There are another 250 Trade Alerts coming at you over the coming 12 months.