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.
Tech Alert - NVIDIA Corporation (NVDA) – STOP LOSS
SELL NVIDIA Corporation (NVDA) March 2021 $495-$500 in-the-money vertical BULL call spread at $2.95
Closing Trade – NOT FOR NEW SUBSCRIBERS
3-4-2021
expiration date: March 19, 2021
Portfolio weighting: 10%
Number of Contracts = 23 contracts
This was a short-term bet that Nvidia (NVDA) would stay above $500 in the next 18 days and we have experienced a pulsating sell-off in growth stocks.
The underlying stock plummeted below $500 and it is time to cut your losses.
We were able to execute an NVIDIA March $590-$595 put spread just before the selling got out of hand so that should soften the losses when we take profits.
Recently, Nvidia announced new graphics cards designed for mining cryptocurrencies which would allow it to boost stock for gamers who want the same cards to run graphically intense games.
Nvidia also forecasted $5.3 billion in revenue for the current quarter, ahead of investor expectations of $4.51 billion.
Nvidia’s underlying stock has risen over 100% in the past year and is at the vanguard of major secular shifts with its semiconductor components for gaming, artificial intelligence, data centers, and automobiles.
Nvidia has two primary segments: Graphics, which is primarily its graphics cards for consumers and professionals, and Compute and Networking, which includes chips for data centers, automobiles, and robots.
If you don’t do options, keep the stock, my end-of-year target is $750.
Do not use Market Orders under any condition. The market makers will fleece you on the spread if you do.
Here are the specific trades you need to exit this position:
Sell to Close 23 March 2021 (NVDA) $495 calls at………….………$22.15
Buy to Close 23 March 2021 (NVDA) $500 calls at……........…….$19.20
Net Proceeds:……………………..…….………..........................…….....$2.95
Loss: $4.15 - $2.95 = $1.20
(23 X 100 X $1.20) = $2,760 or 28.91%
If you are uncertain on 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.
