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) – STOP LOSS
SELL the NVIDIA (NVDA) April 2023 $270-$280 in-the-money vertical Bear Put debit spread at $8.50 or best
Closing Trade
3-17-2023
expiration date: April 21, 2023
Number of Contracts = 12 contracts
This position just hit my rigid loss limit of 2% or capital so I am stopping out.
This week big tech became the flight to safety trade because of their strong balance sheets. Tech has seen the biggest capital inflows in over a year and has seen four consecutive weeks of cash inflows.
I don’t think we can stand in front of these trends anymore.
I am therefore selling the NVIDIA (NVDA) April 2023 $270-$280 in-the-money vertical Bear Put debit spread at $6.50 or best.
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. That causes them to rush in and buy high, like now. I fully expect to see $1,000 a share in the next 3-5 years.
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 ten years.
That’s 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 for 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 will not rise above $270 by the April 21 option expiration in 28 days.
Here are the specific trades you need to close out this position:
Sell 12 April 2023 (NVDA) $280 Puts at…………..............………$27.00
Buy to cover short 12 April 2023 (NVDA) $270 Puts at…………$20.50
Net Proceeds:………………………….………..…………...............….....$6.50
Loss: $8.50 - $6.50 = -$2.00
(12 X 100 X -$2.00) = -$2,400.
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.
