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Do you think the chip tariffs will cause more selling of NVDA today? Or is it still set to rebound due to oversold conditions?
Nvidia is deeply oversold and likely to see a massive rebound during the next few days. It’s very likely to begin sometime today.
After that, we probably will see more selling due to the heavy momentum. Becoming deeply oversold is a double-edged sword. It leads into a massive rebound, but then we usually see another sharp leg lower.
So I expect to see Nvidia rebound up to around yesterday’s gap-line at $128 ad then it’s probably going to see another leg lower from there. We’ll probably consider reducing the positions we just bought on that bounce and then waiting to re-add those positions on the next leg lower.
Hail DC
Please see the Trade Watch update at 10:15 AM. We’ll probably sell the March calls at around $8.50 today.
Ho, you’re seeing a rebound followed by more down?
If AAPL quickly continues towards 240-244, do you plan on exiting the March 240$ calls (Baratheon)? We might get in the -10% to -18% range tomorrow if this continues.
No I meant, on this position, if it continues we may be only down -10% to -18% tomorrow instead of -30%.
So we’re up so much now on the April’s that it far more than off-set the March calls. Apple is up nearly 10% now from its lows. What we don’t want to happen is for Apple to then start to pull-back. So from a risk perspective, it just makes sense for us to close at $9.10 and then let the April’s ride. They’re at a high delta now so any upside Apple adds will start to expand the gain on the April calls. They’re at 18 of intrinsic value with only $6.00 in premium. So they’re going to expand real fast if Apple pushes through the $240’s.
Also, we have Apple earnings coming up which totally skyrockets the risk on the $240’s. Just can’t hold hem when we can cut and run for a mere $350 loss. especially when our winning trades are yielding $600-$1,000 in gains each.
What’s the near term outlook for AAPL in terms of the earnings report? Is a sell off immediately following the most likely scenario?
Earrings is always a gamble to be honest. There’s really no way to know how the market is going to react. There are far too many variables. So I steer clear of making decisions that surround earnings releases.
We are holding April calls. Apple does to rally more than 10% after reaching oversold conditions. Those rallies tend to last for 10+ days.
I do think the QQQ is nearing the end of its down cycle soon. So our focus is just on how Apple is going to trade in the intermediate-term.
What we might do is sell weeklies against our April $220’s. By selling weeklies, we can off-set some of our cost basis. If Apple skyrockets, so beat it. We’ll take the full return. So that’s how we might play it in the coming days ahead of earnings.
Do you think it’s imperative that we hedge our positions early for stark given the existential threat that the chip tariffs imposes on our NVDL?
We might do that. Just not yet. We’re sitting on a lot of cash in the portfolio at the moment. We’ll get to that point soon. Nvidia is going to rebound pretty big.
We’ve only seen the bear response. There will be a bull response and then the market might take Nvidia lower again after that. So yeah we might put that hedge on during this rebound in the coming days.
Does this make for an entry for the remainder cash in Frey/stark leaps
Hi Vignesh — so we already bought in Frey Stark during this down leg. When you look at those two portfolios, we added yesterday to both of them.
We won’t add again until Nvidia reaches overall on the daily chart.
So after this rally ends, I’m assuming Nvidia sees another leg lower.
When the next leg happens, if Nvidia reaches over sold conditions on the daily chart, then we will buy a remaining 1/3 position in Nvidia in both Frey and Stark
Hello Sam,
I understand that we have to wait 128-135$ for NVIDIA to sold shares and wait again to see 115-120$ to buy again before next rallye to 145$ ?
Yeah, something like that. Though I’m not sure on the downside target yet. That target will be determined by oversold conditions.
So where to buy Nvidia on the next leg down really depends on how oversold it becomes. And really it depends on if it becomes oversold on the daily chart. If it becomes oversold on the daily chart, then we have a very different situation. Overall, on the daily, and we have a very very strong case for a big rally.
But this big rally is before earnings on 28th february ?
We always see NVIDIA go rally before earnings and go down after.
So rally to 145 before earnings and then downside to 115-120 before rally to 170$ in april, may ?
Sam ?
Please note the 11:20 AM post on the Baratheon strategy. Also, I know some of you mentioned that you had filled on the Apple April $230 calls back on January 13. I personally filled that position as well. I’m no longer that trade. Like Baratheon and Targaryen, the focus is the $220 April calls and the Targaryen Call-spread. I’m out of the April $230’s. I believe it would be too over allocated to be long the April $230’s and the April $220’s right now. Apple has reached deeply overbought conditions.
No longer holding anything north of 230 through earnings then?
Nope. Just the April $220’s and the April $230-$240 call-spread in Targaryen which we’ll probably close before earnings.
Question about NVDA 4/17 $125 calls. Do you have a thought about when you might see an exit coming on those? Within days, weeks; certain triggers or any plan being formed in your mind around those? I don’t always see the notifications in time (due to my own distractions) so heads up appreciated. Also, what great analysis and much needed direction in this market. I decided to exit NVDA shares before things went south Friday then got back in this morning. I am completely satisfied to watch other people continue to prosper and I will rejoin later, perhaps this week. I hope everyone did as well from your advice as I did today. I likely would not have gotten back in had I not followed you here; thank you.
Hi Angela — thanks for the kind words. So my thinking on the April $125 calls is to exit when the hourly RSI reaches the mid-line. We’re also watching the lower gap-line (yesterday’s high of the day) at around $128-$129 a share. Those are a few obvious points. Once the RSI reaches the midline AND Nvidia tests the lower gap-line.
Realistically, with those options expiring al the way out in April, we may take a very different approach. We may also sell weekly calls against our postion. So rather than selling for example, we might sell this week’s $135 calls. If we can even get $1.00 out of it, that’s a good result. That’s because if we can pull $1.00 each week, then by the time the volatility ends and Nvidia sustains an actual real rally back toward $140-$150, we could end up making bank.
So we might take that approach instead. Sell weeklies, hold the position, maybe even add to it once Nvidia pulls back.
Please note the 12:43 PM update on the QQQ & Nvidia. The tl;dr of the post is this. The QQQ rebound has gone far enough to warrant the beginning of a second leg lower. So we’re going to sell our QQQ April calls in Baratheon at $15.50 first chance we get.
As Nvidia is concern, the rebound HAS NOT gone far enough yet. Nvidia is actually still closer to oversold than it is to the mid-line. That means technically speaking, the rebound still hasn’t even started yet! If Nvidia were to turn lower now, it would just reach oversold conditions right away indicating the first leg hasn’t started. So we need to see the RSI reach the mid-line before Nvidia rebound #1 is considered complete. Still, we want to reduce our 12 contract position in the Nviida April $145-$150 call-spread down to 7 contracts from 12. So we might do that. we might sell at around $1.40 to $1.50. It reduces our cost-basis considerably since we bought at $1.00 and $1.30.
What’s the rationale for getting another leg lower in the QQQ and NVDA? Is it because there’s still a gap unfilled?
Momentum and sentiment. When we have the level of selling we saw this week, it’s typically not a solitary thing. We usually get more selling afterward. At least there’s risk of that happening.
I think with the QQQ the risk is very very two sided. The QQQ can just as easily march back to its highs. But we’re taking more careful approach. If we owned 2 contracts right ow, we would only sell just 1. But as it happens, we only have the 1 contract. So we have no choice to reduce risk.
Please see the update to the Targaryen Portfolio. With Nvidia (NVDA) rebounding to $127 today, it has essentially met our target on the rebound and allowed us to reduce our 12 contract position in the Nvidia $140-$145 April 17 2025 Call-Spread. Really happy with the trade.
We now own 7 contracts at around $1.00 effective cost-basis when considering the gains on the sale.
Being in a 7 contract position opens up all types of possibilities for us. We don’t have to worry abut risk to the portfolio as it’s a small position now with big potential. We could hold this position all the way to expiration and we may very well do so.
Unable to buy that spread, I purchase 2x April 115 calls yesterday, up 35%. Should I cut those loose as well? What do you recommend?
Hi Chris — so as a newsletter writer, I am very limited in the types of things I’m allowed to say. All I’m allowed to do is really outline what the newsletter is doing, what the model portfolios are doing and our reasoning for why we’re making the trades we make. The model portfolio are supposed serve as sort of a teaching instrument.
There are SEC rules that regulate this. While I would love to be able to tell you what to do, I can only really say what we’re doing.
And here’s what we’ve done essentially. If you consider Arryn or Tyrell as being a centralized portfolio, then Targaryen and Baratheon represent 15% of the portfolio overall. $115,000 (10k Baratheon and 5k Targaryen).
The portfolio themselves are essentially positions within those two portfolios.
Now when you look at what we’ve done in Targaryen with the April $140-$145 call spread, we now own essentially a $700 position which is 6/10th of 1% of the overall portfolio.
In Baratheon, we also own 1 contract in the April 125 calls. We’re still holding that position. That one contract relative to an overall portfolio, represents about a one percent position.
To the Baratheon portfolio it represents a 10% position or thereabouts.
And then, obviously in both Arryn and Tyrell, we own a 25% positions in Nvidia long-term.
Now that Nvidia has rebounded up to 127 to 128 — which is our upside target for the rebound — the risk of Nvidia sustaining a second leg lower is substantially higher.
If in Targaryen, we were holding a two contract position right now instead of spreads, we would probably close out one of those contracts. Just like we closed out about half the spreads.
In Baratheon, we haven’t done anything yet, although we might close the position or sell weekly calls against it as a way to protect the position.
I wish I could tell you more, but you have to basically make inferences from here.
Oh right, sorry for the oversight. I think I will hold on to 1 and treat it akin to the 125 call in Baratheon. Together they are less than 1%. I still appreciate you giving alternatives to spreads in Targaryen. I hate making you type 🙂 Thank you for your steady navigation.
You don’t ever have to apologize to me lol. If anything, I’m sorry that this is the way things work. It’s unfortunate.
Sam, I just would like to thank you for your deep analysis. The past 6 months have been a roller coster and your newsletter helped me make wise decisions.
Could not agree more. Sam’s analysis has helped me navigate this shitstorm with so much ease.
Amen to that brother
Thank You Julie, Yash and JW ????
Really appreciate the vote of confidence. Hopefully we can build a community here and hopefully everyone can reach their long-term goals.
old time Redditors who were able to sort through the absolute gibberish knew they could trust this guy
Absolutely! “Trust the dieselcock” That’s been my motto! I joined to get insight into timings, but the wealth of knowledge here is incredible! The content here is first class and Sam puts in crazy hours to make it happen. Thanks for the great content!
Wow. I went through the exact same experience. I’ve been WSB gambling until I saw Sam’s post on the NVDA subreddit. Everything makes so much sense after joining his newsletter. I truly love his approach and daily analysis. I learned so much!!!
I too bought NVDA in July and saw Sam’s posts on the NVDA subreddit. I am new and learning so am not doing all these trades, but trying to digest and take notes so I can make gains later. Sam’s updates really helped me not worry so much about what was happening to my stocks because I had a better understanding of these market cycles. I would never have known otherwise..
Small correction, it’s ChatGPT with a P and not a B. Very happy you’re able to use it to make a plugin to save you a lot of time! I love reading your content, and if it enables you to write more, that’s an absolute win!
lol. like seriously. this entire time. THIS ENTIRE TIME…I use this 9 hours a day and I’m just noticing this now. My brain is like wtf?
Does buying a call with a longer expiration offer enough protection not to close it if you can’t sell premium? I bought the NVDA call for baratheon with May expiry instead of April.
It’s tricky. So selling the premium reduces basis thereby reducing risk. And if you can do it enough times you could potentially reduce risk to literally zero. It’s rare, but it does happen. We sell $11 of premium and it’s zero risk trade.
So it’s a tough spot to be in. One way to always be able to reduce risk where one can’t sell premium would be if you could sell half your position. If we were long two contracts and could sell 1 contract, then that’s how we’d do it.
Destroyed by hopping on NVDA on July too! Was about to throw in the towel on stocks until I stumbled upon that very same article. Went from deep in the red, to finally green. I also get more sleep as I don’t have to wake up early in the morning to look at stock movement.
Yesterday was the first correction I can actually participate in, and it was wild throwing trades left and right.