NVIDIA Corp. (NVDA)

Update 3/6/2023: I exited my short bull put vertical spread on March 6, 11 days before expiration, for a $4.70 debit per contract/share, a loss before fees of $240 per contract. Shares were trading at $239.97, up $30.93 from the entry level.

The Implied Volatility Rank at exit was 17.7%, down 20.2 points from the entry level.

I exited 12 days after entry because the price moved contrary to the direction of the trade. The timing of the exit was dictated by the shares scheduled to go ex-dividend the next day. Had I held the position, the short calls would almost certainly have been assigned, and I would have had to pay the dividend to the anonymous owner.

Despite the forced exit, I got out for $30 less than the maximum risk.

Shares rose by 14.8% over 12 day2 for a +450% annual rate. The options position produced a 51.1% loss for a -1,553% annual rate.

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I have entered a short bear call vertical spread on NVDA, using options that trade for the last time 23 days hence, on March 17. The premium is a $2.30 credit per contract share and the stock at the time of entry was priced at $209.04.

The Implied Volatility Ratio stood at 37.9%.

Premium:	$2.30	Expire OTM
NVDA-bear call spread	Strike	Odds	Delta
Calls
Long	215.00	60.0%	45
Break-even	212.30	57.0%	48.5
Short	210.00	54.0%	52

The premium is 92% of the width of the position’s short/long spread. The profit zone covers a 1.6% move to the upsideand an unlimited move to the downside.

The risk/reward ratio is 1.2:1, with maximum risk of $270 and maximum reward of $230 per contract.

The trade was placed to coincide with NVDA’s earnings announcement after the closing bell on the day of entry.

By Tim Bovee, Portland, Oregon, February 22, 2023

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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