Trade Alert - (NVDA) March 2, 2021 - BUY
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.
Tech Alert - NVIDIA Corporation (NVDA) - BUY
BUY NVIDIA Corporation (NVDA) March 2021 $590-$595 in-the-money vertical Bear put spread at $4.00
Opening Trade (To Hedge Against Already Executed Bull Call Spread on March 1, 2021)
3-2-2021
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 25 contracts
First, we already executed a short-term bet that Nvidia (NVDA) will stay above $500 in the next 18 days with a March $495-$500 bull call spread.
NOW, we are also executing a put spread against it.
Why?
I am surprised with the terrible price action in NVDA. It's certainly highly disappointing.
And it’s a worrying sign and in light of executing two other call spreads on Amazon and Netflix, which are doing much better, I am going to throw in an NVDA hedge to protect against the downside before the situation gets out of hand.
Volatile stocks can go against investors quickly.
I am now neutral short-term on NVDA with upside bets on AMZN and NFLX.
Both NVDA spreads will earn full maximum profits if the underlying share price at March 19th expiration is between $500- $590.
Do not use Market Orders under any condition. The market makers will fleece you on the spread if you do. Fast-moving markets mean fast-moving option prices.
Here are the specific trades you need to execute this position:
Buy 25 March 20201 (NVDA) $595 puts at………….………$56.28
Sell short 25 March 2021 (NVDA) $590 puts at……..…….$52.28
Net Cost:…………………....................…..…….………..…….....$4.00
Potential Profit: $5 - $4 = $1.00
(25 X 100 X $1.00) = $2,500 or 25.00% in 17 days
If you are uncertain on 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.