DailyPlay for Friday Jan 13th, 2017 – NVIDIA (NVDA)
During our webinar today, one of our subscribers, Onno S. asked to take a look at symbol NVDA. After reviewing the current strength of the technology sector and NVDA (Technical Score of 10) we saw an idea for a contrarian trade. We are using our DailyPlay to share this idea that we discovered during our webinar.
NVDA is part of the technology sector which has seen strength over the last 6 months. As a contrarian trade, we saw that NVDA has been a very strong bullish trend, but price action was starting to show a possible top. Coupled with a stratospheric valuation, NVDA will likely struggle to continue higher and we look to sell a Feb 105/110 Call Credit Spread for $2.00 per contract. NVDA’s implied vol currently sits at its 69% percentile, providing a good opportunity to sell credit spreads.
This strategy profits if NVDA ($103.44) stays below $107 by Feb expiration (62% probability). This benefits whether NVDA stays flat or moves lower. Risking a max of $300 if NVDA was to close above $110 by expiration.