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) May 2024 $740-$750 in-the-money vertical Bull Call debit spread at $8.60 or best
Opening Trade
4-4-2024
expiration date: May 17, 2024
Number of Contracts = 12 contracts
We just had a nice $71, or 7.28% dip in NVIDIA shares. I don’t mind going long this stock going into the April 22-26 conference in Hanover, Germany where they almost certainly have only good news to announce.
The sky-high implied volatility for the options of 42.3% makes this easy to do so as we are paid richly to take a position. By comparison, the implied volatility for the S&P 500 is a lowly 12.2%. That’s the implied you get when markets grind up almost every day for five months.
This is a rare case where I plan to buy high and sell higher.
With markets this one way, you have to put in your bids on one of the few days when everyone else is throwing up on their shoes.
It helps also that the market is not too expensive and overbought, with an S&P 500 earnings multiple of 21X.
I am therefore buying the NVIDIA (NVDA) May 2024 $740-$750 in-the-money vertical Bull Call debit spread at $8.60 or best.
Don’t pay more than $9.20 or you’ll be chasing on a risk/reward basis.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
Analysts always make projections based on extrapolating current demand. What they don’t take into account is the fact that NVIDIA’s products are being designed into new products at an incredible rate. Their newest Blackwell chip is now selling for an eye-popping $50,000.
As a result, every portfolio manager has to own (NVDA) or risk getting fired, unless they run a value fund. I fully expect to see $1,000 a share in the next months.
But that’s just me.
I’m always looking at the ten-year view. I have been doing so since 1970. It pays big time.
Santa Clara-based NVIDIA designs and manufactures high-end, top-performing graphics cards or GPUs. There is probably one in your PC. They are essential in the artificial intelligence, automobile, PC, supercomputing, cybersecurity, and gaming industries.
They are also crucial for national defense. The Biden administration recently banned NVIDIA from exporting high-end chips and their manufacturing equipment to China, which they were using to build sophisticated weapons to use against us. This revenue loss is what has taken the shares down to their current low levels, down 65% in six months.
NVIDIA has long been one of the fastest-growing US companies. Since 2005, its annual net income has soared from $89 million to $9.7 billion.
If the highest growth sectors in the economy are Robotics, AI, and energy storage, (NVDA) is in the sweet spot of every one of these.
And before you ask, NVIDIA is an abbreviation for the Latin word for “envy.”
To learn more about the company, please visit their website at https://www.nvidia.com/en-us/
This is a bet that NVIDIA will not fall below $750 by the May 17 option expiration in 30 trading days.
Here are the specific trades you need to execute this position:
Buy 12 May 2024 (NVDA) $740 calls at…….……..………$167.00
Sell short 12 May 2024 (NVDA) $750 calls at……………$158.40
Net Cost:………………………….…............……..………….….....$8.60
Potential Profit: $10.00 - $8.60 = $1.40
(12 X 100 X $1.40) = $1,680 or 16.27% in 30 days.
If you are uncertain about how to execute an options spread, please watch my training video by clicking here.
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 on expiration months farther out.
Keep in mind that these are ballpark prices at best. After the alerts go out, prices can be all over the map.
