NVIDIA Corp. (NVDA)

NVDA publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time eight days hence, on Aug. 18.

Implied volatility stands at 60%, which is 4.2 times the VIX, a measure of the volatility of the S&P 500 index.

NVDA’s IV stands in the 98th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $168.24.

Premium:	$16.46	Expire OTM
NVDA-iron fly	Strike	Odds	Delta
Long	200.00	91.2%	11
Break-even	186.46	~81.0%	~23
Short	170.00	54.4%	49
Puts
Short	170.00	43.7%	51
Break-even	156.46	~66.1%	~29
Long	140.00	89.3%	8

The premium is 55% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

Decision for My Account

This trade is a beautiful set, a work of art, really. But I’m passing on it. The price of the stock and the high implied volatility mean that even at one contract I would have to commit more to a single position than I’m comfortable doing. My motto: Trade small, trade often.

By Tim Bovee, Portland, Oregon, Aug. 10, 2017

Disclaimer

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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Based on a work at www.timbovee.com.