Hot Take: Nvidia's Earnings - The Potential "Nothing Burger"

(what if everyone is wrong)                                                                                                                                                                                                                                                                                                                                                                                                                 August 27, 2024 | [Read Online]( [fb]( [fb]( [fb]( [fb](mailto:?subject=Post%20from%20Don%27s%20Trading%20Desk&body=Hot%20Take%3A%20Nvidia%27s%20Earnings%20-%20The%20Potential%20%22Nothing%20Burger%22%3A%20%28what%20if%20everyone%20is%20wrong%29%0A%0Ahttps%3A%2F%2Fdon-kaufman.beehiiv.com%2Fp%2Fhot-take-nvidias-earnings-potential-nothing-burger) Don Kaufman, here. Gather 'round because I’m about to dive deep into an NVDA earnings play that might just knock your socks off. But first, let's set the stage. Nvidia (NVDA) is set to report earnings tomorrow, and the options market is pricing in a massive move. We're talking a straddle priced at $14 for options expiring in just 3 days. That's some serious implied volatility, folks. But here's where it gets interesting - we've got +40 analysts covering this stock. That's 40 different opinions, 40 different models, and 40 different ways to interpret whatever numbers NVDA throws our way. And you know what happens when you get that many cooks in the kitchen? Sometimes, just sometimes, you end up with a whole lot of nothing. 🚨 24-Hour Profit Windows: Wall Street's Hidden Wild Side 🚨 What if I told you that Wall Street's biggest, most stable stocks have a secret... - ✅ 30% returns in a single day from META - ✅ 55% gains in just over two weeks from COST - ✅ Nearly 55% in a week from "boring" Treasury Bonds (TLT) I've successfully raided 19 out of 22 of these windows recently. That's an 86% win rate on moves that most traders never even notice! Join me LIVE on Wednesday, August 28th at 1 PM ET Learn how to spot and capitalize on these 24-Hour Profit Windows! [REGISTER NOW]( Don't let this opportunity slip away. Spots are limited! That's right, I'm talking about the potential for a "nothing burger" - a scenario where NVDA's earnings come and go, and the stock barely budges. Now, I know what you're thinking. "Don, have you lost your mind? This is NVDA we're talking about!" But hear me out. In the world of trading, it's often the unexpected that presents the greatest opportunity. And that's exactly what we're going to exploit today. So let’s talk about why this “unlikely” occurrence can pay off big… The at-the-money straddle is trading at $14. What does that tell us? It tells us that the options market is expecting a move of about $14 in either direction. Let's break that down: - NVDA is currently trading at $128 - Expected move up: $128 + $14 = $142 - Expected move down: $128 - $14 = $114 So what’s the best way to play it if you think this is a non-event? The Butterfly Strategy. Instead of betting on a big move, we're going to play both sides with butterfly spreads. Why? Because if NVDA does pull a "nothing burger" and stays relatively close to its current price, we could be looking at some serious profit potential. Trade Setup: NVDA 115/128/141 Call Butterfly Buy 1 NVDA 115 Call Sell 2 NVDA 128 Calls Buy 1 NVDA 141 Call Net Debit: $3.61 Alright traders, let's dive into this butterfly spread and see what we're working with. Max Profit Potential: The maximum profit on a butterfly spread occurs when the stock price lands exactly on the middle strike at expiration. In this case, that's $128. Max Profit = Wing Width - Net Debit Max Profit = $13 - $3.61 = $9.39 That's a potential return of 260% on your investment. Not too shabby! Just keep in mind, we don't need to hit max profit to have a winning trade. If NVDA lands anywhere in our profit zone between $118.61 and $137.39, we're making money. Break-Even Calculations: Lower Break-Even Point: Lower Break-Even = Lower Strike + Net Debit Lower Break-Even = $115 + $3.61 = $118.61 Upper Break-Even Point: Upper Break-Even = Upper Strike - Net Debit Upper Break-Even = $141 - $3.61 = $137.39 Max Loss: The maximum loss on this trade is limited to the premium paid, which is $3.61 per spread. Stay disciplined, manage your position, and remember - pigs get fat, hogs get slaughtered. Don't get greedy trying to squeeze every last penny out of this spread. I believe the best chances to exit this position would be on Thursday morning. NVDA tends to have big moves the days following earnings. So this isn’t something you set it and forget it. As the analysts digest the earnings reports and new recommendations and price targets are set, momentum should pick up in one direction or the other. This butterfly spread isn't just a trade… It's a statement. It's us saying, "Hey, maybe all this hype is just that - hype." And if you’re right? Well, you could be laughing all the way to the bank. This is not a trade recommendation but an idea for you to think about. I invite you to price out some other butterflies using different strikes. And if you find something juicy, let me know. To your success, Don Kaufman [fb]( [tw]( [ig]( [yt]( Update your email preferences or unsubscribe [here]( © 2024 Don Kaufman - TheoTrade PO Box 24790 Christiansted, Virgin Islands 00824, Virgin Islands, U.S. [Terms of Service](