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Will the Nvidia (NVDA) Bull Run Continue?
Nvidia stock has gained significantly over the last year and several analysts believe there is further upside. Here are two of them – Buy Nvidia, market’s hottest stock, on its gaming, A.I. prowess: Citi and 14% Upside Seen For Nvidia Shares On PC Gaming, Bitcoin Mining Strength.
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Technicals
From a technical perspective, NVDA has been rallying in a rising trend channel since early July. There was a correction that took place late last month, however, the 20-day moving average as well as the lower bound of the rising channel held the stock price higher and continues to offer downside support.
*source Tradingview.com
If you agree there's further upside ahead for Nvidia, consider this trade which is a bet that the stock will continue to advance, or at least not decline very much over the next four weeks.
Buy To Open NVDA 3Nov17 177.50 Puts (NVDA171103P17750)
Sell To Open NVDA 3Nov17 180.00 Puts (NVDA171103P18000) for a credit of $1.10 (selling a vertical)
This price was $0.02 less than the mid-point of the option spread when NVDA was trading near $181. Unless the stock rallies quickly from here, you should be able to get close to this amount.
If you use our favorite broker for this trade, tastyworks, your commission on this trade will only be $1 per opening contract ($2 per spread) (and there is no commission on closing trades, only the $.10 clearing fee). Each contract would then yield $108 and your broker would charge a $250 maintenance fee, making your investment $142 ($250 – $108). If NVDA closes at any price above $180 on November 3, 2017, both options would expire worthless, and your return on the spread would be 76% (1110% annualized).
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Changes to Investor’s Business Daily (IBD) Top 50 This Week:
We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run. Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.
As with all investments, you should only make option trades with money that you can truly afford to lose.
Happy trading,
Terry
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Any questions? I would love to hear from you by email (terry@terrystips.com), or if you would like to talk to our guy Seth, give him a jingle at 800-803-4595 and either ask him your question(s) or give him your thoughts. seth@terrystips.com
You can see every trade made in the actual option portfolios conducted at Terry’s Tips and learn all about the wonderful world of options by subscribing here. Why wait any longer to make this important investment in yourself?
I look forward to having you on board, and to prospering with you.
Terry
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