As Nvidia shares firm, options trading could net close to $300

The semiconductor industry continues to offer excellent income generation opportunities amid heightened volatility and a strong uptrend.


With positive flows in both technology stocks and options making more bullish bets, this is an ideal time to take a look at the behemoth NVIDIA (NVDA). Chip stock has both price strength and a certain cult following.

As markets deliver wild swings, the quest for high volatility and significant premium led me to position myself in a short Iron Condor expiring in May.

Nvidia Stock Iron Condor setup

The trade is a Short Iron Condor composed of a short call spread and a short put spread. It targets a specific price region over a specific period of time.

  • Sell ​​to open the Nvidia May 19th monthly 290 views and buy to open the Nvidia May 19th monthly 295 views.
  • Sell ​​to open Nvidia’s May 19th 245 monthly puts and buy to open May 19th 240 monthly puts.

The total credit is $2.95 and the total risk is $2.05. The total spread between strikes is $5.

With a composite rating of 98, Nvidia ranks below the strongest in the industry, such as Broadcom (AVGO) And lattice semiconductor (LSCC).

But option chains are very active and offer excellent space to sell time premiums, which is the goal of this short Iron Condor.

The weekly chart is showing a solid uptrend with some level of resistance near the 290 levels. Current prices are showing some brief flat formations.

This options strategy works well when volatility in option chains is elevated compared to previous times and when there is a likelihood of a freeze at previous resistance levels.

The break-even prices are $292.95 up and $242.05 down.

Trade exploration and decision reasons

Identify the most important diagram levels.

There is congestion between price levels 245 and 290.

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Nvidia options trading scenarios

What could happen:

  • The stock moves into expiry week within the above congestion range and we take full profit.
  • The stock moves into our 50% payline – when the position is worth around $1.475 – and we exit the trade.
  • The stock is recovering and moving above 295 with volume for more than three days. This means that we need to get out as the chart is in a breakout.
  • The stock is recovering and trading below 245 with volume for more than three days. This means we have to exit as the chart is showing a breakdown.

Anne-Marie Baiynd is a 20-year veteran stock, options and futures trader and the author of The Trading Book: A Complete Solution to Mastering Technical Systems and Trading Psychology. She holds no positions in the investments she writes about for IBD. You can find her on Twitter and Stocktwits at @AnneMarieTrades


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