by Ian Harvey
October 02, 2018
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA continues to climb higher. An option call trade was recommended to “Armchair Trader” Members on Wednesday, September 26, 2018, based on bullish notes, and Bank of America Merrill Lynch raising its price target to $360; and with expectations of a breakout – which has now occurred.
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, has seen its shares rally on bullish notes from Jefferies analyst Mark Lipacis as well as Cowen bulls.
The stock soared 11 percent on Tuesday following the bullish notes from Wall Street analysts. AMD is now up 173 percent and is the S&P 500's top technology stock in 2018. Technical analyst Todd Gordon of TradingAnalysis.com says AMD shares could surge to $30 per share, a level the stock hasn't seen in 12 years.
"This is obviously this chip story stock here; it's in a great technical position, great fundamental story behind it here, and I like it a little bit higher here," Gordon said.
In a note to clients on Monday, Jefferies analyst Mark Lipacis lifted his 12-month price target for AMD shares by 36% from $22 to $30. His new forecast implies a 7% upside from Tuesday's close at $28.06. The analyst estimates that by the second half of 2019, AMD will have a faster chip than Intel for the first time in recent history marking a “foundational shift in competitive dynamics.”
AMD has been viewed as a beneficiary of setbacks faced by Intel in moving to its next-generation 10-nanometer chip technology, which the firm now says is slated for release by the 2019 holiday season. Meanwhile, AMD is expected to release its faster, more power-efficient 7-nanometer server chips next year.
Jefferies lifted its 2019 AMD server chip market share estimate to 12% from 8%.
"Meanwhile, our checks also suggest that AMD continues to take share in high-end notebooks," added Lipacis.
Bulls at Cowen echoed the bullish sentiment on AMD shares, lifting their 12-month price target from $25 to $30 and citing advantages of getting to market with a faster chip before rivals.
"Intel's delayed 10nm roadmap — originally targeted for 2016 launch in client and now pushed to 2H19 — opens opportunities for AMD across the business," wrote Cowen's Matthew D. Ramsay in a report released on Monday.
AMD has seen its stock price skyrocket 1,442% over the last three years, from under $2 per share in August of 2015. Shares of AMD did go through a slow stretch during this time period, but have returned to impressive growth recently. AMD stock was up over 135% before Tuesday's gains over the last six months, which crushes the S&P 500's 7% jump and its industry's 2.4% pop.
** OPTION TRADE: Buy NVDA NOV 16 2018 280.000 CALL at approximately $8.50 TO $9.00.
Place a pre-determined sell at $17.00.
Also include a protective stop loss of $3.40.
The Result So Far………
Shares of graphics chip specialist NVIDIA jumped 5.1% to close at $281.02 per share on Friday. That level is a whisper away from the stock's all-time closing high of $283.70 set on Sept. 4.
Friday's winning day brings the tech darling's return to 45.5% so far in 2018, versus the S&P 500's 10.6% return.
And then yesterday, saw Nvidia Corp. shares close at a record high, leading the chip makers higher and tacking on gains from last week’s rally.
Nvidia shares surged 3% to finish at $289.36, after touching an intraday high of $292.06. The last time Nvidia closed at a record was $283.70 on September 4.
Nvidia shares are up nearly 50% for the year, compared with 9.4% advances in both the SOX index and S&P 500 index (SPX), +0.36% and a 16.4% gain in the tech-heavy Nasdaq Composite Index (COMP).
The company has been riding high on the artificial intelligence and cryptocurrency waves, and the stock has risen 92% since the start of 2017, resulting in a $123 billion market capitalization.
So, for “Armchair Trader” members, who managed to execute this trade recommended by Stock Options Made Easy; and had an exit price already established, profits of 100% were made.
Entering the option trade at a cost of $8.50 or less; and the sell price on the option was set at $17.00; a profit of 100% was made within a week. The option trade price went as high as $22.05 during yesterday’s trading, passing our sell-price of $17.00. Therefore, one options contract would provide a profit of $850.00; or 100% Profit.
If the trader had bought at $8.50 and sold at $22.05, then one options contract would provide a potential profit of $1,355.00; or $159% Profit.
A NICE FINISH TO THE WEEK!
On Friday, Evercore ISI analyst C.J. Muse hiked his price target on Nvidia to $400 from $300 on the company’s AI and gaming chips.
He thinks the company’s deep-learning platform is nearing a major breakthrough and predicts that Nvidia’s stock will continue to post strong gains as the company deepens its artificial-intelligence push.
“We view Nvidia as being on the cusp of a tipping point in the company becoming the AI standard platform,” Muse wrote. He sees a number of applicable business areas, including gaming, high-performance computing, pro visualization, transportation, health care, and autonomous machinery.
And yesterday, even with widespread worries of how a China trade war will hurt the chip sector, Oppenheimer analyst Rick Schafer, who has a buy rating on Nvidia and a $310 price target, said that in the server market, Nvidia’s “dominance here appears secure,” and that excess inventory of the company’s previous generation Pascal architecture gaming chipset should be cleared by mid-November, opening up for sales of its Turing architecture gaming chipsets.
As well Goldman Sachs analyst Toshiya Hari recommended selective exposure in semiconductors, especially due to the prospect of a deceleration in growth in the fourth quarter of this year and the first half of 2019; and has a price target of $324 on Nvidia shares.
Thanks to the introduction of Turing-based products, Nvidia's gaming business is on the verge of accelerating, Hari said. The analyst expects the introduction of the T4 inference solution along with updated software to lead to a positive inflection in the inference business within the data center segment.
The high-margin Professional Visualization segment should show robust growth, as the Turing launch helps Nvidia gain share at the expense of CPUs, the analyst said.
Of the 34 analysts who cover Nvidia, 21 have overweight or buy ratings, 12 have hold ratings, and one analyst has a sell rating, with an average price target of $293.68.
ACTION TO TAKE…….
** A New Options Trade To Consider: Buy the NVDA JAN 18 2019 320.000 CALL at approximately $9.00
Place a pre-determined sell at $18.00 if you wish.
Also include a protective stop loss of $3.60.
As you would have by now realized, some of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, as obvious in this case where the trade was based on varying factors; but during earnings season this strategy of predicting earnings has been very profitable.
Sometimes it is our approach to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use – such as found with the “Earnings Predictions Program”. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.
Strategies to Consider……
It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” .....READ MORE.....
"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.……continue reading this article……
Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
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