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) – TAKE PROFITS
SELL the NVIDIA (NVDA) August 2024 $70-$73 in-the-money vertical Bull Call debit spread at $2.98 or best
Closing Trade
8-7-2024
expiration date: August 16, 2024
Number of Contracts = 40 contracts
I can’t believe it.
Here it is only the fifth trading day of August, and I have already issued 10 trade alerts. I think that’s some kind of record.
I’m not seeing much of Lithuania.
We have only seen three spikes in the Volatility Index ($VIX) to $65 or higher since we started this newsletter 16 ½ years ago. My experience is that it is impossible to lose money on a call OR put spread when you buy it at a $65 VIX.
That was certainly the case with this trade. I slapped it on when the stock was trading at $100. It is now at $104 in the pre-market. In the meantime, the Volatility Index cratered from $65 to $25. You made all your money on the volatility crash in a mere 48 hours.
As a result, you have 95% of your maximum potential profit in hand. The risk/reward for continuing for seven more trading days is no longer favorable. Besides, cash is incredibly valuable right now and there are more great trades to do.
I am therefore selling the NVIDIA (NVDA) August 2024 $70-$73 in-the-money vertical Bull Call debit spread at $2.98 or best.
As a result, you get to take home $1,520 or 14.61% in 2 days. Well done and on to the next trade.
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 lower your offer by 2 cents with a second order.
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 $100/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 20% 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 “envy.”
To learn more about the company, please visit its website at https://www.nvidia.com/en-us/
This is a bet that NVIDIA will not fall below $73 by the August 16 option expiration in 9 trading days.
Here are the specific trades you need to exit this position:
Sell 40 August 2024 (NVDA) $70 calls at………….………................$35.00
Buy to cover short 40 August 2024 (NVDA) $73 calls at……………$32.02
Net Proceeds:……………….….………..………....................................…$2.98
Profit: $2.98 - $2.60 = $0.38
(40 X 100 X $0.38) = $1,520 or 14.61% in 2 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.
