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Tuesday, May 2, 2017

ALERT: NVDA-Trading Idea Strategy To Capitalize On The Earnings Report

Experts Predict 50 Billion Devices Will Utilize This New 

Options Trading Idea – NVDA

image of Nvidia logoNVIDIA Corporation operates as a visual computing company worldwide. The company’s products are used in gaming, professional visualization, datacenter, and automotive markets. It sells its products primarily to original equipment manufacturers, original device manufacturers, system builders, motherboard manufacturers, add-in board manufacturers, and retailers/distributors. NVDA reports earnings on May 9, 2017 let us take a look at an options trading idea strategy to capitalize on the earnings report.
image of NVDA Stocks chart with options trading idea
Techincally, the chart looks phenomenal! I can see a classic uptrend with the recent 4 months of sideways consilidation. I like to break down these trend phases as action, reaction, and resolution. Currently, NVDA is at the reaction phase with an earnings beat I think we go to phase 3 resolution. I  analyze NVDA via the Dynamic Trend Indicator from my TOS charts that NVDA is a BUY from the Daily to Weekly time frames for a swing trader. This gives me confirmation that I should only look for long set ups.
As of May 2, 2017 NVDA is trading at 106 with the expected move for May 12, 2017 option expiration is $9. I can find the expected move by adding the ATM straddle for the week of expiration.  Therefore, if I add 106 + 9 = 114 as an upside target for an options play expiring on May 12, 2017. The goal from trading the weekly options capturing the earnings move is I can isolate the earnings event. Why not use May monthly options? Well, if on May 17th NVDA gets a downgrade this could effect the stock price and my trade can quickly go from a winner to a loser!

Options Trading Idea:

I am bullish on NVDA using my Dynamic Trend Indicator. Historically, NVDA reports fantastic numbers and 3 out of the 4 past quarters are bullish.  For a favorable reward vs risk set up I am buying the May 12, 2017 expiration 110 calls and selling the May 12, 2017 115 calls for a bull call spread for $1.50 debit. My max loss on the trade is $150 per 1 lot and my max gain would be $350. (The 5 dollar wide spread minus the $1.50 debit I paid) Therefore, I am looking for NVDA to close on May 12, 2017 at 115 or above. My break even would be $111.50. ($110 + $1.50 = $111.50)Technology By 2020. 

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