This eliminates any earnings related risk. The spread expires before earnings, currently estimated for late August. It is also well below the support area at $175. The short $175 strike provides a 11% downside cushion to the $195.94 closing price of NVDA stock. Maximum gain on the trade is $35 per spread. Sell NVDA Aug $172.5/$170 put spread for a $0.35 net credit. It is so important to lower risk in this type of market environment we are currently experiencing. It allows one to position bullishly on an oversold NVDA stock in a defined risk manner. Selling an out-of-the money bull put spread makes probabilistic sense. This means option prices are more expensive, which favors option selling strategies. The recent drop in both NVDA and the overall market has caused implied volatility (IV) to pop significantly. Fortunately, the options market provides a lower-cost way to be a buyer on a further leg lower. Buying just 100 shares would still cost nearly $20,000.
Now that the pullback has come to fruition, my bearish outlook has turned somewhat bullish-because price does matter.īuying NVDA stock outright is both risky and rather expensive, even after the split. I noted how both the technicals and fundamentals had reached an extreme and recommended a bear call spread to position for a pullback.
I had a decidedly more bearish outlook for NVDA stock in my last research piece on June 25. I am certainly far from a perma-bull on NVDA. Finally, Intel (NASDAQ: INTC) closes out our falling chip stocks on Friday with a 4.4% decline this afternoon.7 Great Momentum Stocks to Buy Before July Ends.Next up we have rival chipmaker Nvidia (NASDAQ: NVDA), which is seeing its stock slip 7% as of this writing.Let’s start with AMD, which is currently down 11.2% as of Friday afternoon.
Let’s get into that below! Chip Stocks Down on Friday As a result, several of those shares are down today. Samsung (OTCMKTS: SSNLF) says it too foresees weak profit as consumers turn away from smartphone and memory chip purchases.Īll of this has investors worried that other chip stocks won’t perform well in the coming months. And it’s not the only company putting out such a warning. The chip company expects revenue to be $1 billion lower than its already soft estimates for the quarter.Īccording to AMD, the PC market experienced weakness during the period which explains its lower revenue expectations. That data comes from Advanced Micro Devices (NASDAQ: AMD) and has to do with its upcoming earnings report. Chip stocks are heading lower on Friday after recent data from a major player spooked investors.
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