NVDA Analysis


NVDA publishes earnings on Thursday after the closing bell.

I shall use options that trade for the last time eight days hence, on Nov. 17.

Implied volatility stands at 51%, which is 4.6 times the VIX, a measure of the volatility of the S&P 500 index.

NVDA’s IV stands in the 64th percentile of its annual range and at the peak of its most recent broad movement.

The price used for analysis was $203.03.

Premium: $16.55 Expire OTM
NVDA-iron fly Strike Odds Delta
Calls 235.00 92.6% 9
Break-even 221.55
Short 205.00 56.1% 48
Short 205.00 44.0% 52
Break-even 191.55
Long 175.00 88.9% 9

The premium is 55.2% of the width of the position’s wings.

The risk/reward ratio is 0.8:1.

The zone of profit in the proposed trade covers a $15 move either way. The biggest immediate move after each of the past four earnings announcements was $141.20, and the average was $42.77. After eliminating the maximum and minimum post-earnings movements, the central tendency is $13.57.

The expected move covering 85% of occurrences is $015.87 beyond /the profit zone.

The bid/ask spread is 2.9%.

Decision for My Account

A beautiful structure, actually. The expected move is the tiniest morsel beyond the profit zone, but otherwise, it would be a good position.

The risk, however, is higher than I go with a single trade in this account. An experienced options CBOE floor trader told me, “Trade small, trade often”, and I have made that motto my own, a fundamental rule underlying the daily risks I take. So I’m passing on the trade. If my rules allowed larger positions on this account, then I would take it.

Hey, NVIDIA, time for a stock split, yes?

By Tim Bovee, Portland, Oregon, November 9, 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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