There will always be opportunities to buy. Personally, I don’t buy ahead of earnings at this point. As I mentioned, in the post, there are two major likely outcomes and in both cases I’ll have a better opportunity down the line.
Even if it blasts off after earnings. I’ll still be able to buy it later at a discount.
to guarantee a fair buy in price, you can DCA before and after earnings. maybe future dips will be 160-130 range and no longer in the 120s, who knows.
today nvidia 130 price has a PE of 75 but after ER, this will be closer to 60.
today 100 low price was PE 60 so 130 might be the new 100 after this earnings report.
If you hold for the long term, there will be little difference in todays price. For example if you zoom out and check last year nvidia price swings, they are minor compared to today. You can assume the same in next 3 5 10 years
Julien Tran
August 27, 2024 9:30 pm
Great insights as always, Sam! Given the potential for a post-earnings rally followed by a pullback, as you outlined, do you think it’s worth considering a strategy that involves trimming positions after the expected gap-up and then re-entering during the next correction? Also, with Nvidia’s market cap now at $3 trillion, how do you see the company’s valuation influencing the broader NASDAQ-100 in the coming quarters, especially if earnings reactions become more muted as you suggested? Would love to hear your thoughts on managing exposure to Nvidia in a portfolio as the stock matures.
So those a big question with a lot information to cover. I’ll be addressing those issues. With regards to Nvidia’s valuation starting to get a little rich, I’ll be covering that topic under the Nvidia tab in the menu.
As to trading around Nvidia as it goes into earnings, there are smart ways to do that.
I think the right way involved holding score long term 2-year expiring DITM leap option for inherent leverage and then selling a moderately intermediate call option against that position.
For example, the January Nvidia $160 calls are trading at $8.20. $160 is a full 25% from current levels right?
Suppose I owned the December 2026 $100 calls at $50.00 a contract. That expires in more than 2-years out.
If Nvidia drops $20 after earnings, those January calls will drop to at least $4.00 if not lower after earnings giving me roughly $4.00 of downside protection. That’s about 10% of my entire position.
Now suppose instead Nvidia rallies to $150 after earnings. I can just hold those January calls until expiration. Since I’m DITM, my delta in the leaps will approach 1. And Nvidia will have to eclipse $168 before I take an actual loss in the January calls I sold.
That’s how I might play it. Selling covered calls is very tricky and there are a lot of factors that go into it. It’s generally not a good idea and often people get screwed out of their positions if they don’t execute it right.
Here’s there’s also long/term capital gains considerations. But I was sort of just outlining this as an example of what I might do if LT cap gains isn’t at issue.
Rather than trim, I’d rather use covered calls to get to the same result. But in going to cover that in a lot more detail under Samwise Investing. A menu tab coming to the site.
I appreciate your detailed breakdown of the strategy involving DITM LEAPs and selling covered calls.
I think I would wait for the post-earnings reaction, so I can assess the outcome and then place a directionally good bet. This approach also allows me to take advantage of the post-earnings IV crush, where options become cheaper, offering a more favorable entry point.
Looking forward to your thoughts on this!
Ryan
August 28, 2024 3:11 am
So Sam in your opinion what should guidance look like to keep the arrow green and pointed up?
By
/ August 27, 2024 
If I am new to Nvidia and I want to be in, should I wait post earnings to buy? When will be the buy opportunity at this point?
There will always be opportunities to buy. Personally, I don’t buy ahead of earnings at this point. As I mentioned, in the post, there are two major likely outcomes and in both cases I’ll have a better opportunity down the line.
Even if it blasts off after earnings. I’ll still be able to buy it later at a discount.
to guarantee a fair buy in price, you can DCA before and after earnings. maybe future dips will be 160-130 range and no longer in the 120s, who knows.
today nvidia 130 price has a PE of 75 but after ER, this will be closer to 60.
today 100 low price was PE 60 so 130 might be the new 100 after this earnings report.
If you hold for the long term, there will be little difference in todays price. For example if you zoom out and check last year nvidia price swings, they are minor compared to today. You can assume the same in next 3 5 10 years
Great insights as always, Sam! Given the potential for a post-earnings rally followed by a pullback, as you outlined, do you think it’s worth considering a strategy that involves trimming positions after the expected gap-up and then re-entering during the next correction? Also, with Nvidia’s market cap now at $3 trillion, how do you see the company’s valuation influencing the broader NASDAQ-100 in the coming quarters, especially if earnings reactions become more muted as you suggested? Would love to hear your thoughts on managing exposure to Nvidia in a portfolio as the stock matures.
So those a big question with a lot information to cover. I’ll be addressing those issues. With regards to Nvidia’s valuation starting to get a little rich, I’ll be covering that topic under the Nvidia tab in the menu.
As to trading around Nvidia as it goes into earnings, there are smart ways to do that.
I think the right way involved holding score long term 2-year expiring DITM leap option for inherent leverage and then selling a moderately intermediate call option against that position.
For example, the January Nvidia $160 calls are trading at $8.20. $160 is a full 25% from current levels right?
Suppose I owned the December 2026 $100 calls at $50.00 a contract. That expires in more than 2-years out.
If Nvidia drops $20 after earnings, those January calls will drop to at least $4.00 if not lower after earnings giving me roughly $4.00 of downside protection. That’s about 10% of my entire position.
Now suppose instead Nvidia rallies to $150 after earnings. I can just hold those January calls until expiration. Since I’m DITM, my delta in the leaps will approach 1. And Nvidia will have to eclipse $168 before I take an actual loss in the January calls I sold.
That’s how I might play it. Selling covered calls is very tricky and there are a lot of factors that go into it. It’s generally not a good idea and often people get screwed out of their positions if they don’t execute it right.
Here’s there’s also long/term capital gains considerations. But I was sort of just outlining this as an example of what I might do if LT cap gains isn’t at issue.
Rather than trim, I’d rather use covered calls to get to the same result. But in going to cover that in a lot more detail under Samwise Investing. A menu tab coming to the site.
I appreciate your detailed breakdown of the strategy involving DITM LEAPs and selling covered calls.
I think I would wait for the post-earnings reaction, so I can assess the outcome and then place a directionally good bet. This approach also allows me to take advantage of the post-earnings IV crush, where options become cheaper, offering a more favorable entry point.
Looking forward to your thoughts on this!
So Sam in your opinion what should guidance look like to keep the arrow green and pointed up?