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) December 2024 $117-$120 in-the-money vertical Bull Call debit spread at $3.00
Closing Trade
12-20-2024
expiration date: December 20, 2024
Number of Contracts = 40 contracts
Since I have a record ten positions expiring at max profit today, December 20 options expiration, I am going to start sending out the closing trade alerts so you don’t get overwhelmed.
Since I issued it 33 trading days ago, the shares have risen by 30% above the nearest $120 strike price.
Just to be clear, this position does not expire until after the close today, December 20.
As a result, you get to take home $2,800 or 30.43% in 33 trading 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, December 23, and the margin freed up.
Some firms charge you a modest $10 or $15 fee for performing this service.
The flight of money right now is from small, undercapitalized, and questionable to large, overcapitalized, and rock-solid balance sheets.
There is a new theme in the post-election market. Falling interest rates are out, deregulation is in.
Buy this year’s winners and sell the losers. That is what every professional money manager will be doing. 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 had 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.
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 on 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 is the specific accounting you need to close out this position:
EXPIRATION of 40 December 2024 (NVDA) $117 calls at………….………$17.52
EXPIRATION of short 40 December 2024 (NVDA) $120 calls at……..…$14.52
Net Proceeds:…………………….…………….………............…………..............…$3.00
Profit: $3.00 - $2.30 = $0.70
(40 X 100 X $0.70) = $2,800 or 30.43% in 33 days.
