Samwise Quick Reference Handbook
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Obviously it’s hard to predict the top and when to buy (you seem to nail the latter quite precisely though), but for someone with a long-term oriented portfolio in NVDA at an average cost basis of in the 120’s, would you recommend just holding the stock through all of the upcoming noise and likely pullbacks, or is selling and then reentering at more favorable prices a possible good approach here?
I have a lot of NVDA…just trying to figure out if it’ll make sense to make a play or be as passive as passive can be. My thinking is that this is one of those stocks that you should pretty much just hold for a long, long time…with the only real plays being buying more on dips.
So if you look at the common stock portfolios, that’s how we’d play Nvidia. We didn’t close it out. But we did sell covered calls yesterday and did hedge it.
If you look at the Frey portfolio, we own Nvidia at $122.74 and up 33% on the stock. We got about $8,000 in gains.
We sold the Nvidia September 19, 2025 $170 calls for $9.25. That means that Nvidia can rally to $179.25 and we’d still profit and be forced out at a $179.25 effective exit come September. That’s assuming Nvidia even trades north of $170 come September.
As we’ve mentioned repeatedly here, if we’re forced out at $179.25, we’d almost certainly be able to buy back at a cheaper price down the line. It’s inevitable that Nvida will eventually drop to $150 or below even in the most rosy bullish circumstances.
So selling the $170’s at $9.25 allows us to essentially reduce our basis by $9.25 right? Now instead of owning Nvidia at $122.74 its $122.74 – $9.25 =$113.49. That becomes our effective cost-basis at that point.
WE then further hedged our Nvidia by purchasing the June 2026 $130 puts for $2,055. That will ensure that even if Nvidia were to crash in some financial crisis or company specific reason, I’m protected below $130. This allows us to remain long with confidence because we know that anything bad happens, we’re protected.
Suppose Nvidia falls back to $100, we’ll make $30 or triple our hedge producing $4,000 in gains on the puts. That could then later be used to go long.
That $2,000 hit goes against our future profits. but we’re up $8,000 right now and selling covered calls for $1800 essentially pays for the hedge.
So when asking about how we’d manage Nvidia common stock related issue, it’s what we’re doing in Tarly/Frey/Tyrell. How we manage Nvidia in those portfolios is precisely how we’d manage it.
For Nvidia leaps or NVDL, it’s how we manage it in Arryn, Lannister and Stark that should give you the answer.
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The reason we hedge — even when we believe in the stock — is because you never know when a 2008 scenario might pay out or when an existential risk might appear. Even perceived existential risk like DeepBlue can impact the stock. So we hedge to protect it.
Also, the puts essentially allow us to do the same as “selling” and then buying back later because we can use the profits generated from the puts to off-set the correction. We can transition at extremes like when Nvidia fell to the $80’s back in April.
Hey Sam, great breakdown. Along the same lines, what are your thoughts on missing out the “compounding” component? For example, let’s say 100 Nvidia shares were bought at $120, it’s up to $160 now. By selling at $160 and buying back in at $130, you can add 23 shares that will produce more gains on the way back up (rinse and repeat). Do the risks outweigh the potential benefits? Is it possible to achieve the same by doubling hedges (closing half at the bottom to buy additional stock and keeping the other half as protection)?
There’s too much opportunity risk with doing things like that. The only circumstances where doing anything like that makes sense is after a major run like we’re seeing. And usually, it’s within the context of using covered calls and hedges as we have.
WE’re doing this exact thing but only if Nvidia rallies to $179 and closes there or above that level come September 19.
What you’re outing is timing the market which is generally extremely difficult to do because it’s easy to sell too early. Anyone who sold under $130, for example, is now at risk of not being able to buy back at $130.
So it has to be done at extreme and preferably with covered calls and hedges. Nvidia is at extremes right now, but we’d need to see it climb another $13 before we’re out of the stock from here.
Hi Sam,
I’ve always been curious as to the seasonality of corrections. You’ve mentioned July/August corrections are common. Do you feel this is likely self-fulfilling as participants notice this pattern and thus makes corrections self-fulfilling as they take their exits near this time? Or, I’ve also thought about how the length of intermediate rallies seem to have a general bounding box in terms of duration and perhaps this leads to corrections happening in July/August due to the consistently spaced intervals of time.
Thanks!
It’s a bit of both. Some recognition of seasonality and some of it due to the time cycle. For example, in consumer technology, everyone knows the holiday shopping is seasonally the strongest time the time. When that ends, it leads to a peak in the market (January). There was a time where Apple very very consistently rallied from September to January, reported its Q1 earnings in late January, and then sold-off. It did this every year during the iPod era and early iPhone era.
That seasonal pattern is still there for consumer tech at large. When the market goes through that pattern, it sets the tone for the entire year because of the general rally-correction cycle based on time.
Sell in May and go away is recognition of the cycle. Summer volumes decline and we tend to get corrections right around the end of May and month of June. That happens when we’ve had a correction in January – February, rally from February – May from a time-cycle point of view.
Hi Sam,
Sorry for the potentially repeated question, but in a recent briefing you said:
So, in case #1, the final segment concludes and we just go straight into a correction. Pretty straightforward. For case #2 and #3, the market attempts at a final segment and essentially falls flat to the measured upside target of the segment.
Are there any distinguishing features that help us distinguish between a final segmented rally pull-back and the actual correction starting? Is there a stark difference in volatility? volume? price behavior?
Any thoughts would be great 🙂
Thanks!
There’s really nothing that I can tell that would help us determine which is which. Beyond I’d say this. The way the market is behaving right now does give a sense that we’re going to see #1. This segment isn’t quite playing out the way it should. The market is basically consolidating instead of just peaking, pulling back and beginning a new run. It’s basically rebuffing pullback attempts. So we could see the market just enter a consolidation-type cycle like March 2024 where we see incremental new highs with very slight pull-backs for a few weeks.
Under normal circumstances, the market should have peaked on Wednesday. Yesterday and today’s action sort of indicates consolidation and another push up. If you compare the May 12- May 25 period to this one, the key difference is that instead of pulling back sharply the last day or two, the QQQ has simply continue to trade in sideways consolidation.
It’s hard to identify features that point to one or the other. But as of right now, the QQQ is looking less likely to peak right here due to Thursday – Friday trading action.
Take a look at the attached chart. You can see the difference between the two periods (May 12-May 25) to (June 28 to today)
Do we expect a 10% correction on the QQQ by beginning of Aug? or more like a 3-4% pullback?
Full 10%+ correction by end of July or beginning of August. The latest it can go is late August. We’d be sitting at 100-days at that point. Only a handful of rallies have made it that long. So while possible it can extend to end of August, I highly doubt it given the percentage gain we’ve seen at this point.
A 3-4% pull-back should have started yesterday. The market has kind of extended past that point.
But full correction by end of July. And there’s a very high likelihood of that.
Sam, thank you for the daily briefings.
I’m curious whether we’ll see any pullbacks or corrections even before September, since sentiment now seems the opposite of April’s crash — the market is retesting all-time highs every day. Good news is good; bad news is good.
My question is, can we exit the Nvidia $150 put (9/19) at breakeven at least, or the $90 put (6/18/2026) before expiration? I feel we won’t even see Nvidia touching $140 even during correction.
Thank you in advance,
It’s easy to be drawn by that type of sentiment. But you here’s what I advise you should do. Go to stock charts.com, and look back to each market correction (QQQ correction). Looks at the dates. Jot them down. Note the percentage losses.
If you don’t want to do the legwork, we’ve posted them for you in the NASDAQ-100 tables. Here’s a link:
https://sam-weiss.com/nasdaq-100-qqq-corrections-rallies/
Then chart out Nvidia along side it during those dates. Check the QQQ rallies, how long they lasted, how big the percentage gains were. Note the interval. DOn’t get draw in by sentiment because that changes on a dime. We went from everything is going to shit at the beginning of April, to everything is great by mid-April. So don’t fall for that nonsense. This is business a usual and it has been going on as long as i’e been following the market (25-years now). Sentiment isn’t an indicator for anything because it will change on a dime the moment the market starts randomly selling-off or rally in the case of a bear environment.
But just follow the cycle. Now look back to past Nvidia sell-offs. Periods after Nvidia has been rallying for some time. What happens?
What’s the smallest Nvidia correction we’ve seen take place during a QQQ correction. What you’ll find is it is in the low 20%-area. That’s the beta for Nvidia. It falls at least 22-23% on market corrections. Sometimes much much larger.
For example, last August Nvidia fell from $140 to $90 as the QQQ declined 14% during the exact price same moment the QQQ started decline. Its isn’t just Nvidia randomly dropping 35%. No QQQ correction. No Nvidia decline of 35%. They go hand in hand.
The QQQ declined 8% in September, Nvidia fell 23%. That’s on a relatively minor 8% drop.
The QQQ declined 8% in January. Nvidia fell 26%. Part of it due to deep seek. But notice the QQQ was correcting at that time.
QQQ rallied back to its highs and lo and behold, Nviida rallied back to its highs. The QQQ sustains a 25% correction between February and April and Nvidia declines 40% during the same period of time.
So you can do this all by feel or you can go back and analyze the data and figure it out. The QQQ is likely to sustain an outsized correction at the end of July maybe late August at the latest. 80% chance of July based on the data. 20% by end of August.
If the QQQ declines 10% which is standard, Nvidia probably falls 22-25%. Somewhere in that range. From $170 that’s a decline down to around $127 to $132 a share. IF the QQQ falls 14% as we expect – like last August — Nvidia probably declines closer to 25-30%. Anywhere from $120 to $130 at a $170 peak. It’s provably headed for that zone if the peak in Nvidia is near $170. From $180, probably closer to $125-$140 depending on the QQQ correction.
So as the September $150 puts are concerned, there’s a very strong chance those will end up profitable. We’re still in them to make money. The smallest correction Nvidia has had in the last 18-months was 22%. A 22% decline from $170 a share would put Nvidia at $132 a share. That would lead to a 100% return on the September $150 puts.
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As the Nvidia $90 puts are concerned, that put is never ever intended to be profitable. That put is intended to protect our December 2026 $100 call-option position. Note the ratios in the Arryn Portfolio:
We are long:
(1) Nvidia (NVDA) December 2026 $100 calls at $37.00 per contract x 6 contracts for a $22,000 cost-basis (market value $47,000.00).
We have protected that position by purchasing:
(1) Nvidia (NVDA) June 2026 $90 puts at x 6 contacts ($2,760.00). Notice how our profit in our long call is $25,000.
*This put position is barely north of 10% of our profits. It’s a tiny position relative to the portfolio (1% at market value). It is NEVER intended to be closed out with any value at all. If they go $0.00 and Nivida is at $190, then it has done its job. The point of the insurance isn’t to then profit on the insurance. It’s to insure our position. If they make a profit, great. But we’re not going to close them out down the line. We’re literally going to hold those until expiration and quite possibly until they’re worth $0.00. They’re protecting our position.
It’s a very concerning question to be posed. It worries me a little that one would ask whether we’re going to close out our hedge at break-even. Hedges aren’t bought with that purpose in mind.
They’re bought so that if Nvidia crashes to $70 a share or something, the $47,000 we have invested right now in the Dec 2026 $100 calls will be protect to some extent by owning the puts to protect the position. Their job is to eventually expire worthless if Nvidia climbs and to produce a big off-set against our losses in the Dec 2026 $100 calls if Nvidia crashes.
(2) We’ve sold the Nvidia September $150 calls short for $9.40 ($5,640). That $9.40 reduces our cost-basis in our Dec 2026 $100 calls by a full $5,640. Now instead of being long at $37.00 per contract average, we’re long at $27.60 ($16,560.00). Further protected by the $4.60 we spent on the June 2026 puts.
Those two actions taken together all but insures our capital cost is protected if Nvidia were to crash to $70 a share.
Thank you sir
Do we still expect a pullback and retest do occur between now and the correction at the end of the month?
There’s still time for that. But it’s not certain by any stretch of the imagine. As we mentioned before, the QQQ can peak and pull-back in its 4th segment and then run a test. Or its 4th segment could be the TOP for the market. Notice that sines the bull market started in 2023, all but 1 correction ended on the 4th segment or less (where we are right now). One went to 5 segments. Meaning, in one prior intermediate-term rally we had four segment leading to a 3-4% pull-back another big 10-day rally to new highs and then a top. IN the others, whatever near-term top we have here is also probably close to the FINAL top ahead of a correction.
Basically, it can go either way. The market just peak, pull-back and retest ahead of a correct. Or it can peak, pull-back see one more 10-day run and then top.
We haven’t seen a 6th segment at any point during the current bull market (2023-2026). Five segments has been the max.
Also, the number of session nears 80 at the end of the month and that is a long rally. 100 is the max (end of August).
FX risk is no longer just market-driven – it’s politically guided. Are you ready?
Starting August 1st, the U.S. will impose 25% tariffs on Japanese imports. This marks a paradigm shift: from market-based FX risk to policy-driven FX volatility.
At the same time, Japan’s 30-year bond yield has exceeded 3% – a level unseen since 2000 – triggering major macro ripple effects:
1. Yen carry trade unwind – Higher JGB yields reduce the appeal of borrowing in yen to invest abroad.
2. Stronger yen risk – Already up 8% in 2025, further appreciation threatens Japanese exports and may prompt BoJ intervention.
3. Capital repatriation – Japanese investors hold $1.13 trillion in U.S. Treasuries. A pivot toward JGBs could push U.S. yields higher, increasing global borrowing costs.
4. Global instability – FX volatility, policy misalignments, and trade tensions could create disruptions beyond what we saw in August 2024.
You are right Sam :
1) no correction when market is not ready
2) correction end of month July or starting august
3) you can’t bet on a correction but just protect from it
Thanks for all ????
Wait and see soon !
Best
Karl
Ugh, is this the news-control-market believer again ? Welp, we will see how it go.
QQQ and NVDA have had similar intraday patterns the past two days but NVDA has started off the days higher which has led to NVDA having gains for the day and QQQ having losses (at least as of writing this comment today)
Does this potentially lead to a scenario where QQQ pulls back but NVDA keeps going up? Or, conversely, where NVDA hits deeply overbought before QQQ and pulls back first? Or does this not really matter in the grand scheme of things because both stocks are due to pull back anyways?
So the when the market starts pulling, everything will come down together. The action we’re seeing right now is minor and has no impact. If the QQQ starts to pull-back 3-4%, so will Nvidia but a little larger.
Not spreads. We might buy or add to our Nvidia puts. But most likely between the two, we’ll end up in QQQ put-spreads over Nvidia puts.