Have the bears overplayed their hand on Nvidia (NVDA)? Monday morning will give us the answer. (November 16, 2018)
NVDA
I want to look at NVIDIA ( NASDAQ: NVDA) today. Here’s why: The company reported some pretty crappy earnings only exceeded by its poor guidance. This is why the stock is down almost 20 percent. This was a huge surprise to the market because the options market had actually, on Thursday, been pricing in about a $20.00 move in either direction, up to 222.00 or down to about 180.00-182.00, something like that. So this was a really big surprise and it was all bad unless you were bullish.
So what do you do now? I have got to tell you, I was surprised because the stock had gone down so much and it was so far below what the implied move was that I figured that the stock would recover more than just a few percent but it really didn’t do that. However, if we look at these Bollinger Bands, these three standard deviations from the 20-period moving average, this is the red stuff, the stock is basically breaking a law of nature by being below these bands; it is just not supposed to be this low. Statistically, there is about a .001 chance of that, so this is really rare.
We put on a bull put spread at Option Market Mentor that I think will work out. I think we’re down a little bit right now because I did expect this to move higher and it didn’t; that’s is why they call it trading as opposed to winning. But as long as this 160.00 level holds then I think that trade is going to be fine. And unless the wheels really come off the market wagon on Monday I suspect we are going to get a little bit of a lift here.
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