NVDA Analysis


Update 6/23/2017: NVDA traded within a range of less than $5, allowing time decay and declining implied volatility to bring the position to profitability. I exited at 21.3% of maximum potential profit.

Shares declined by 1.4% over three days, or a -169% annual rate. The options position produced a 27.0% yield on debit for a +3,289% annual rate.

NVDA has sufficiently high implied volatility to qualify for analysis and possibly a trade.

I shall use options that trade for the last time 10 days hence, on June 30.

Implied volatility stands at 41%, which is 3.9 times the VIX, a measure of the volatility of the S&P 500 index.

NVDA’s IV stands in the 47th percentile of its annual range and the 67th percentile of its most recent broad movement.

The price used for analysis was $158.26.

Premium: $8.13 Expire OTM  
NVDA-iron fly Strike Odds Delta
Long 175.00 89.4% 12
Break-even 165.63
Short 157.50 47.4% 56
Short 157.50 52.5% 44
Break-even 148.13
Long 140.00 93.2% 6

The premium is 49% of the width of the position’s wings.

The risk/reward ratio is 1.2:1.

Decision for My Account

I have entered an order on NVDA as described above. The stock at the time of entry was priced at $158.59.

By Tim Bovee, Portland, Oregon, June 20, 2017


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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