Buy Alert: October 11, 2016

| October 11, 2016

Buy Alert:  October 11, 2016

 

Trade Details

Buy NVIDIA (NVDA) November 18th 60 Puts for $1.48 or better (lower)

 

Why?

The market has been very resilient this year, with most down days quickly followed by a buying frenzy.  For the most part, buying calls on individual equities has been the better strategy due to this dynamic.   However, with potential volatility events on the horizon, it’s time to have a downside play in our portfolio.  NVDA has had a great year, but the buying has gotten to a point where the stock is overbought.  High valuation names like this are the first to get pummeled when the market goes south.

We’re going to buy November puts.  Conservative investors can take profits at $62.  Aggressive investors can hold down to $58.  Yes, the exit points are out of the money, but we’re looking for the move to happen prior to expiration when plenty of extrinsic value still exists.  For risk control, conservative traders should exit at $70, while more aggressive traders can hold to $72.

 

Recent Activity

NVIDIA

 

Category: OTW Buy Alerts