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 2024 $117-$120 in-the-money vertical Bull Call debit spread at $2.30 or best
Opening Trade
11-4-2024
expiration date: December 20, 2024
Number of Contracts = 40 contracts
OK, this is my first post-election trade.
Buy this year’s winners and sell the losers. That is what every professional money manager will be doing on Wednesday morning. They want to window dress their holdings for yearend and harvest tax losses, mostly in energy. That makes the post-election rally really very easy to play.
This trade has the advantage in that it gets massive support from the 50-day moving average at $125.62. This will be useful when the market quits panicking and returns to looking at the moving average.
For NVIDIA to get down to our upper strike price of $120, the price earnings multiple would have to drop from 60X to 51. Massive institutional buying will pour in well before that, as the company is still growing at 50% a year.
I am therefore buying the NVIDIA (NVDA) December 2024 $117-$120 in-the-money vertical Bull Call debit spread at $2.30 or best.
Don’t pay more than $2.60 or you’ll be chasing on a risk/reward basis.
DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES.
Simply enter your limit order, wait five minutes, and if you don’t get done, cancel your order and increase your bid by 10 cents with a second order. If that gets you nothing, try raising your strike prices by $1.00.
If you live in a foreign time zone when the US stock market is closed, such as Australia, and aren’t sitting in front of a screen all day, simply enter a spread of Good-Until-Cancelled orders overnight, like $2.30, $2.40, $2.50, and $2.60. You should get done on some or all of these.
NVIDIA is so far ahead of the competition that no one will catch up for years. What the (NVDA) bears don’t get is that the company has a moat so wide it is impossible to cross. Their enormous lead in software is the result of crucial platform decisions made 20 years ago. The key staff are all looked up with ultra-cheap equity options with strike prices around $1-$2.
Virtually everyone has now raised their upside targets for the stock over $1,000/share. That’s because with a price-earnings multiple of 30X, it is still the biggest Big Tech stock in the market. By comparison, its biggest customers (META) is at 34X, AI Leader (MSFT) is at 38X, and (AMZN) is at 63X. Efforts by Alphabet to break into the AI chip business are feeble at best.
Every 15% correction in (NVDA) over the last two years has been a strong “BUY”. It owns the AI manufacturing business. It’s looking at $250-$500 BILLION in sales growth per year over the next several years.
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 $120 by the December 20 option expiration in 33 trading days.
Here are the specific trades you need to execute this position:
Buy 40 December 2024 (NVDA) $117 calls at………….….……$25.00
Sell short 40 December 2024 (NVDA) $120 calls at…….……$22.70
Net Cost:………………………….………..…..........................………$2.30
Potential Profit: $3.00 - $2.30 = $0.70
(40 X 100 X $0.70) = $2,800 or 30.43% in 33 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.
