Thinking about trading Nvidia (NVDA) tomorrow? Here are your levels. (August 16, 2018)
NVDA
I want to look just real quick at NVIDIA ( NASDAQ: NVDA ) and here’s why: The company reports great earnings; right? Everybody loves NVIDIA ( NASDAQ: NVDA ). We hear all about the new chip that they have; it’s artificial intelligence nirvana, etcetera, etcetera, etcetera, so you have got to get in on this stock before earnings. Well, not so much.
Here are my thoughts on that: There are no easy trades, at least the ones that you make money on. There are an infinite number of trades that make it really easy to lose money. The thing is when everybody is looking in the same direction that is generally not the direction you want to be looking in. Sometimes it works out but typically it doesn’t because, again, there is no easy money.
With NVIDIA ( NASDAQ: NVDA ); I was looking at the options market and it had like, I think, a $16.00 move priced in one way or another. In this case, of course, this move is lower and now it is down $11.00. If you are trading NVIDIA ( NASDAQ: NVDA ) the easy trade, frankly, is the trade tomorrow morning. Not the one where you buy before earnings so you can get in on a good deal.
No; it is one where you look and see what the stock is doing. You look and see what the options market has priced in. The option prices for the August options that are supposed to expire tomorrow, in fact, they will expire tomorrow, they have no choice, they are supposed to get a move of like $16.00, so really down here, we’ll say 240.00. Options, typically they will price in a bigger move than you are ultimately going to see.
What I would suggest doing on this is actually really easy. Forget about the stuff on the upside; maybe this is going to rebound tomorrow and it will be $300.00 and everybody is going to be happy, happy, joy, joy. But instead, I would look at this and say. “If I am looking to buy NVIDIA and I am a patient investor, what I am trying to do is buy it as close to the 200-day moving average as I can; because the stock hasn’t been there. Not in this whole chart has it been to the 200-day moving average. So any of these pullbacks are pullbacks that I want to buy.”
So you can be buying here but my suggestion would be: You look at it now and it is down $10.00. The implied move was down more like 16.00, again, we’ll say 240.00. So the closest to 240.00 that you could get this stock the better off you would be. That is how I would be trading NVIDIA ( NASDAQ: NVDA ) if I am looking to trade tomorrow. The closer I can get it to 240.00 the more confident I am going to feel about it.
Now, if you are a day trader that is probably not going to be your trade. But if you are a longer-term trader who wants to take advantage of the big artificial intelligence trend, that has actually been going on for a quite a number of years but now a lot of people are just finding out about, then this is how you buy NVIDIA ( NASDAQ: NVDA ) with a little bit of artificial intelligence. Use 240.00 as your reference point. Get it as close to there as you can because the closer you get to 240.00 the more staying power you are going to have. You are not going to be freaked out by any little move one way or another. That is how I would trade NVIDIA ( NASDAQ: NVDA ) tomorrow.
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