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) – EXPIRATION
EXPIRATION of the NVIDIA (NVDA) July 2023 $350-$360 in-the-money vertical Bull Call debit spread at $10.00 or best
Closing Trade
7-21-2023
expiration date: July 21, 2023
Number of Contracts = 12 contracts
With the stock now an eye-popping $173.09,\ or 64.11% above its nearest strike price, I think it’s safe to call this one a win.
As a result, you get to take home $1,200 or 11.11% in 16 days.
Well done and on to the next trade!
You don’t have to do anything with this expiration.
Your broker will automatically use your long position to cover your short position, canceling out the total holdings.
The entire profit will be credited to your account on Monday morning, July 24 and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
During periods of no market direction like this one with an ultra-low Volatility Index ($VIX), traders flock to the few corners of the options market where the payout is still big.
That would include NVIDIA (NVDA), whose options have the second highest implied volatility at 40% of any major company after Tesla.
After decent earnings, which triggered a blowout 20% move up in the shares, the good news was out, at least for the next 16 trading days, which includes the ultra-slow Fourth of July week, a US national holiday. It is now up an impressive 319% from the October low.
It helps also that the market is still expensive and overbought, with an S&P 500 earnings multiple of 20X and a Mad Hedge Market Timing Index of 82.
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.
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 3-5 years.
It’s also hard to imagine NVIDIA’s stock not going ballistic when Tesla’s EV production is rocketing from 1 million to 20 million in ten years.
That’s 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 them 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. Its NVIDIA Titan V graphics processing unit used for supercomputing architecture sells for an eye-popping $2,999. It is the one stock every portfolio wants to buy on the dip.
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 was a bet that NVIDIA would not go below $360 by the July 21 option expiration in 16 days.
Here are the specific trades you need to execute this position:
EXPIRATION of 12 July 2023 (NVDA) $350 Calls at………...….……$173.09
EXPIRATION of short 12 July 2023 (NVDA) $360 Calls at……...…$163.09
Net Proceeds:………………………….………..…........…..............….….....$10.00
Profit: $10.00 - $9.00 = $1.00
(12 X 100 X $1.00) = $1,200 or 11.11% in 16 days.
