NVIDIA (NVDA) – Bearish Earnings Trade for August 13th, 2018

On Friday’s Options Action, the crew analyzed the performance of semiconductor stocks. Semiconductors have revisited its dot-com highs and started to underperform the overall market recently. NVIDIA (NVDA) has remained above its bullish trendline but has failed to make higher highs, suggesting a topping formation. Coupled with an elevated valuation and falling sales from cryptocurrency miners, downside risks are high going into earnings next week. With an elevated implied volatility, Michael Khouw suggests buying an Oct 250/220 Put Vertical for an $8.55 Debit. As of Friday’s close, this spread is trading at $8.40.

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: NVDA Options Action

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