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) March 2024 $600-$610 in-the-money vertical Bull Call debit spread at $9.80 or best
Closing Trade
2-22-2024
expiration date: March 15, 2024
Portfolio Weighting: 10% down to zero
Number of Contracts = 12 contracts
At one point last night, (NVDA) was up $110, from $640 to $750. That’s the biggest one-day large cap pop I have caught in size in my 55-year career.
That is the largest one-day creation of market capitalization in stock market history, some $250 billion. NVIDIA is now the third largest company in the US after Microsoft (MSFT) and Apple (AAPL).
NVIDIA Announced Blowout Earnings, with AI reaching the “tipping point” according to the CEO Jensen Huang. Revenues came in at a spectacular $22.1 billion versus an expected $20.6 billion off the backing of exploding data center demand, up 33%.
Earnings were up 22% QOQ and 225% YOY. The shares exploded $110 in the aftermarket at one point, up 17%. Forward guidance was ramped up too. Buy NVDA on dips. At a PE multiple of 18X, it is the cheapest AI stock out there.
This is a rare case where I bought high and sold higher. It worked.
I am therefore selling the NVIDIA (NVDA) March 2024 $600-$610 in-the-money vertical Bull Call debit spread at $9.80 or best.
As a result, you get to take home $1,440 or 13.95% in 9 trading days. Well done and on to the next trade.
Only use a limit order. DO NOT USE MARKET ORDERS UNDER ANY CIRCUMSTANCES. Just enter a limit order and work it.
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 year.
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.
But that’s just 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 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 of 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 fall below $610 by the March 15 option expiration in 16 trading days.
Here are the specific trades you need to exit this position:
Sell 12 March 2024 (NVDA) $600 calls at…………........………$172.00
Buy to cover short 12 March 2024 (NVDA) $610 calls at……$162.20
Net Proceeds:………….....……………….………..………….…............$9.80
Profit: $9.80 - $8.60 = $1.20
(12 X 100 X $1.20) = $1,440 or 13.95% in 9 trading 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.
