Nvidia (NVDA) closed +15% last week as tech stocks rallied following the latest cooler-than-expected CPI print. NVDA set to release its earnings report on Wednesday (11/16) after close. Do you think NVDA will open higher on Thurs (11/17) than its closing price on Wed (11/16)?
Wait it out and hope the price drops down between now and expiration. I don't think NVDA will hold until Friday, especially after running up this quick. Of course the jobs report will determine that. I warn against trades like these. High risk, low reward plays that benefit from an unlikely event from occurring since you make the strikes far out-the-money. Works most of the time until the black swan event to your position happens. I hope you get out of this trade with a win, but understand that your max loss at expiration isn't $110K. Your max loss is if NVDA closes above $167.50, but below $170. The short $167.50 calls are in the money and your long $170 calls expires worthless. If this happens, your max loss is $8,375,000. So you want to close these positions out before expiration.
I love AR/VR and I love hypergrowth tech. I'd still pass on this company. META, NVDA, Microsoft, ByteDance, and every big automaker is already deep in this tech, I highly doubt that a $50 million company can compete with them. It seems like they are not profitable, so the current economy is also highly against them.
Most likely, he can say a lot better than that. Haven't followed his trust lately, but a year ago he sold off tons of cryp2 at all time highs, sold off loads of AMD at $160, sold off all the high multiple stuff that has crashed over the last year. And get this, he rolled that into basically energy and oil stocks. So that trust should have done very well. It held a fair amount of AAPL which would be sort of flat. He held the NVDA too long, but still he sold a bunch much higher than current. He lost on PYPL. But for the most part, his call to cash out of tech at peak and move to energy seems like the trust should have done rather well.
They’re worth it just so you can learn how the markets work, for when you have more money. Options… you can make a lot with a little bit. Plenty of options made 6-10x today. E.g. if you bought an NVDA $170C for $24 yesterday it would be worth $240 today. But that’s kinda rare it’s much more likely you’ll just lose 100%.
I do not recommend buying the $160 put on NVDA. The current price of NVDA is above the breakeven point, so you would likely lose money on this trade. ^^[**Discord**](http://discord.gg/wsbverse) ^^[BanBets](https://www.reddit.com/r/wallstreetbets/wiki/banbets/) ^^VoteBot ^^[FAQ](https://www.reddit.com/r/wallstreetbets/wiki/votebot/) ^^[Leaderboard](https://www.reddit.com/r/wallstreetbets/wiki/leaderboard/) ^^- ^^[**Keep_VM_Alive**](https://www.patreon.com/visualmod)
Totally concur on NVDA and their AI/ML opportunity. There are so many reasons: \- First mover advantage \- Huge barriers to entry \- Defacto standard \- Performance and technology leadership \- Lack of competition \- Robust solution/platform \- Lever technology into new segments \- Vertical integration \- Management team and strategic direction \- Very strong balance sheet and financials \- A cash generating machine \- Picks and Shovels type model opposed to point products Happy to discuss any of these subjects in greater detail.
**Ban Bet Created:** **/u/Only-Newspaper-8593** bet **NVDA** goes from **156.8** to **144.26** before **10-Dec-2022 08:45 AM EST** Their record is 2 wins and 0 losses. ^^[**Discord**](http://discord.gg/wsbverse) ^^[BanBets](https://www.reddit.com/r/wallstreetbets/wiki/banbets/) ^^VoteBot ^^[FAQ](https://www.reddit.com/r/wallstreetbets/wiki/votebot/) ^^[Leaderboard](https://www.reddit.com/r/wallstreetbets/wiki/leaderboard/) ^^- ^^[**Keep_VM_Alive**](https://www.patreon.com/visualmod)
Long term I hold the whole market. For short-term taxable fun: I focus on asset allocation and sectors, and select for quality and value within. Financials were highly undervalued for a while, still decent. Communications, RE, and cyclicals are still quite undervalued IMHO. Tech will have great opportunities. I already like MSFT et al., for those more growth oriented and sensitive to interest rates I'll wait a bit. Once that happens, NET, SHOP, ZS, and others show some promise. I like NVDA and NFLX, though they've already risen quite a bit from their nadirs. As cash flows back into riskier items, health care and utilities will underperform quite a bit. Style-wise, small and value looked amazing for a while, now plainly good. Growth presents isolated opportunities. Personally, energy is just a big ball of uncertainty now, and seems to have always been more contingent on geopolitics and weather than fundamentals. Internationally, I like most of the far east. Europe will obviously look good eventually, the question is where the bottom might be. I don't like bottom-timing so I have slowly added small hedged positions. I tend to think EM is primed to really perform well once current morbidities finally relent. I'm staying away from RE for a while longer. That market moves slowly.
>FANG+ Constituents: \>$AAPL 143.14 -0.75% $AMZN 93.14 -0.86% $BABA 80.06 +5.48% $BIDU 100.66 +6.29% $META 109.57 +0.73% $GOOG 95.57 -0.71% $NFLX 279.44 -0.59% $NVDA 157.88 -0.26% $TSLA 182.16 -0.42% $MSFT 240.92 -0.35% ^IGSquawk ^[@IGSquawk](http://twitter.com/IGSquawk) ^at ^2022-11-29 ^10:03:23 ^EST-0500
I’ve been testing a directional bet strategy. Strategy: directional butterfly opened day before earnings on weekly series, idea to take low cost high risk/reward bets that take advantage of expensive far otm options to profit large swings in price. Ideal environment is high volatility and high speculation on earnings. What’s cool is you can usually cut loses around -50% or less when wrong and typical profit has been 125-200%, you can be wrong more than you’re right directionally and still win overall. Position is short Vega which hedges your delta/gamma position since no matter what after earnings you gain off IV crush. Typically if the stock doesn’t move much you can still close around opening cost even when it’s entirely otm. Criteria: - VIX is elevated - high liquidity across option chain, high volume and OI - min 350%-400% return on max risk - high IV rank - nearest long leg within implied move - short leg at or outside implied move - ideally penny increment priced (wide bid/ask kills this) - close within an hour after earnings, win or lose, target +125-200% return on risk for wins and cut loses as quick as possible - target 1-2 dte min after ER Qualitative criteria to help pick direction - several past earnings beats/misses bet that direction, look at competitor earnings beat/miss (a peer beat/miss typically drops IV so you can close at small profit if you change your opinion on the direction) - large/mega cap stocks seem to work best - look at put/call skew vs historic and peer group, bet with the skew if it intuitively makes sense - identify catalysts that would magnify ups/downs relative to historical (macro stuff cpi/industry outlook/world events etc.) reasons high IV might still be underpriced - inverse zacks/Barrons/etc. free articles with clear bias near ER - bet sizing should be small, correlated to relatively low confidence in direction pick General idea is to find quick and simple reasons to pick a direction when the return/volatility hurdles present themselves. Example win: WMT 145/150/155 call butterfly opened at $70 debit. Trading around 142 when opened. Closed at $200 credit at open. Direction correct movement within implied move. Example Neutral Loss: NVDA 155/145/135 put butterfly opened at $150 debit. Trading around $161 when opened. After ER direction was right but not magnitude, closed at $147 credit. Short Vegas saved the position since the sold otm contracts lose most of the extrinsic value and near the money long leg retains more value Example total loss: RIVN put butterfly opened at $65 credit and after ER the stock blasted in the opposite direction. Attempted to close but no fill Still dialing in my criteria but it’s been working well in this market.
Your entire "DD" sounds like you just discovered Steam, or you are bagholding one of the companies. Steam is a direct competitor to Microsoft Store, I don't know how you think MSFT would benefit from it when Microsoft Store is doing so shit that MSFT gave up and listed some of their top games like Microsoft Flight Simulator and Minecraft Dungeons on Steam. NVDA is going to eat shit next quarter, their 4000 series aren't flying off the shelf because of all the scandals and shitty engineering, scalpers are struggling to get rid of the 4000 series cards they hoarded. EA and ATVI are some of the most hated gaming companies for consumers on steam, and their event sales are usually one of the lowest. EA is carried by Apex, and ATVI by COD. Both's recent future guidance is dog shit and was already talked about recently. PS5 is doing so bad that SONY went back on their words and started listing console exclusive on PC. Also, Steam is essentially a gamers' equivalent of booze and hoes, top selling games are either triple A games by a big publisher, porn games, or skimpy weeb games by Koei-Tecmo/Capcom/Square Enix. [Top 5 games with the most concurrent players are literally f2p on cosmetic/battle pass system](https://steamcharts.com/). Your post would make sense last year or 2020, not now where all of them are going to take a hit due to economy situation.
The odds of the stock ramping in the 31 days you cannot own it again are small. Stop trying to be too cute by half with the options. If you want to preserve your exposure, just buy a different semi stock like MU or NVDA. They all trade in very close tandem.
Just to put things in perspective, people write entire books on these topics, as well as training sites (like Option Alpha) that charge subscription fees for that depth of detail. There's no simple and free recipe for selecting trades and exploiting opportunities -- that's basically the core skill set of a successful trader and may take thousands of trades to master. So best we can do in a Reddit post is point you in the right direction, but you'll have hours and hours of additional study and practice ahead of you. No doubt every single item I list below will raise a couple dozen new questions in your mind, but I can't help you answer those. You'll have to find the answers yourself. That's what pointing in the right direction means. Since you have a bullish bias, you are already in a challenging situation, since the overall market is bearish. There simply may not be any good bull trades of any type whatsoever on a day to day basis. So even with the scheme I summarize below, you may come up empty. To get you started, I will summarize what I do, but please understand, this is only one of about a million different ways to solve these problems. I don't claim it is the best or only way to do this. 1. Start by building a watchlist of underlyings to track (I explain how below). 1. Every trading day, sort the watchlist by IV Rank. Look for IV Rank above 50% (I explain why below). If there are no underlyings that meet that criteria, give up for that day. 1. For every candidate underlying, find the next monthly expiration that is as close to 45 DTE as possible. If there are none close to 45 DTE, drop the candidate and try the next one. 1. For each surviving candidate, examine the option chain for the selected expiration for contracts near 30 delta OTM. If there are none +/- 5 delta, drop the candidate. Or, if the bid/ask spread and volume for that strike is poor (bid/ask spread is more than 20% of the bid and/or volume is 0), drop the candidate. 1. Assuming there are any candidates left, open credit trades on the selected strike and expiration. NOTE: Some of the criteria above can be waived for a high enough conviction trade. You may think that XYZ presents an opportunity that is too good to pass up, even though the fundamentals are shaky and IV Rank is below 50%. The one thing you should never compromise on, however, is the liquidity criteria. If the XYZ 30 delta put has 0 volume and $1.00/$3.00 bid/ask, avoid like the plague. **WATCHLIST** You may find it useful to learn how to analyze stocks and funds for short term trading opportunities. It would take an entire book to explain all the ways to do this, so what I do is first make sure that the candidate company has liquid option trading. If it doesn't offer options at all, or the combined volume of all the options chains is less than 100, it's a non-starter. Then find a good analysis site, like gurufocus.com, and examine the fundamentals of the company. I generally want growth companies that aren't meme stocks and that have reasonable fundamentals, like not too much debt if it is an oil company or tech company, forward earnings are forecast to grow, a reasonable amount of volatility (so not an electric utility or a regional bank), etc., etc. This screening should be guided by a macro-economic thesis, like oil will do well during the Ukraine war, or staple good will do better than luxury items during a recession, etc., and base your screening around that thesis. Learning how to do this will take a lot of time and study and reading of financial news daily. Finally, examine the IV history of a typical option contract (ATM monthly put or call), or the aggregate IV of the underlying if your broker lists that. If the 52-week IV range is narrow, like 10%-12%, there isn't enough volatility to trade, so drop it from the list. If it's decent, like 46%-86% (reading off the NVDA aggregate IV from my broker), it's a keeper. Shoot for about 50 underlyings for your watchlist, give or take 20. You can kick-start your pool of initial candidates by going to barchart.com and looking at [the daily option volume leaders](https://www.barchart.com/options/volume-leaders/stocks) near the end of a market day, because high volume tends to correlate with good liquidity. Screen out any underlyings with share prices less than $10 or higher than you can afford, like BLK going for $700/share. **Alternatives** * Rather than build a watchlist from scratch, some people pay for a screening service, like MarketChameleon.com, to screen for opportunities on a daily basis. They are agnostic to macros and underlyings and just want the top opportunities of whatever the market is offering that day. One day they may trade ABC, the next day XYZ, because the screen turned those up, not that they know or care what ABC or XYZ do. * Other people use Technical Analysis to screen for candidates. That's another rabbit hole that could take hundreds of hours of studying to learn. **WHY IV RANK?** Your goal as a credit trader is to find opportunities to exploit buyers overpaying for volatility. If someone buys a put and pays for 100 units of volatility from you, but by expiration only 50 units of volatility actually happens, you pocket the overpayment. Sellers demand higher premiums for higher volatility, because volatility increases their risk of having to honor the contract when exercised. While IV Rank isn't a perfect predictor of overpaying for volatility, the higher the IV Rank, the more the deck is stacked in your favor. Of course, there is also higher risk that the volatility will actually be realized, or worse, you undersold the volatility (you sold 100 units, but 200 units were realized). More about trading volatility here (although these are delta-neutral approaches, not a bullish bias like you asked for): https://www.reddit.com/r/options/comments/ulvsck/theta_without_delta_intro_to_vol_trading/ https://www.reddit.com/r/options/comments/v67zay/a_guide_to_csps/ ----------------------------- I'll stop here, this is getting long. **I've barely scratched the surface of just one way to approach trade selection**. There are dozens of completely different ways to do this, but even this brief summary was super long. That should give you some idea of what you are in for. Happy studies!