by Ian Harvey
November 17, 2018
OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
NVIDIA Corporation (NASDAQ:NVDA)
NVIDIA Corporation had a very disappointing result for third-quarter 2019, suffering from a lack of interest in cryptocurrency mining tools which left the shipping channels overstuffed with unsold graphics cards. The company beat its own earnings guidance despite falling short of management's revenue projections.
A put option trade was recommended to “Earnings Predictions Members on Monday, November 12, 2018, based on several issues – as recent volatility in growth stocks and concerns that Nvidia would struggle to maintain its own remarkable expansion has caused a slow-down in stock price; and since the New Year, NVDA shares are up just 3.3%.
This report caused NVIDIA share price to fall as much as 20.1% on Friday morning, but managed to end the day at $164.43, down −$37.96 or 18.76%. This movement of price provided members of Stock Options Made Easy the chance to make a potential profit of 220%.
Another area of concern is analysts’ optimism towards NVIDIA, particularly Susquehanna analyst Christopher Rolland who lifted his rating on shares of the Santa Clara, Calif.-based tech company from neutral to positive just before the earnings report was due, arguing that the recent sell-off in Nvidia stock, amid larger weakness in the chip sector and even broader turmoil for global markets, is overblown. This causes trader and investors, alike, to be caught in a negative situation of indecision!
PATIENCE PAYS OFF!
YOU NEED TO BE IN TO PROFIT!
The Details Presented Previously……..
The maker of graphics and high-performance computing chips NVIDIA Corporation (NASDAQ:NVDA) will report earnings after the market closes. The consensus earnings estimate is for $1.73 per share on revenue of $3.24 billion; but the Whisper number is for $1.80 per share. Consensus estimates are for year-over-year earnings growth of 30.08% with revenue increasing by 22.91%.
After a very strong bull run that started in the summer of 2015, NVDA has finally started to cool off. The stock was at an all-time high as recently as the start of October, but as volatility hit the overall market in October NVDA really took a hit and the stock in now the lower end of 52-week range.
The recent drop in the stock has lowered NVDA’s valuation, but the forward P/E is still at 26 which is still too high; and as its comparables increase growth will slow.
Also, there is a concern over the impact a trade war between the U.S. and China will have on chip demand and prices, and any signs of weakness could result in a big drop in the stock.
Both recent volatility in growth stocks and concerns that Nvidia would struggle to maintain its own remarkable expansion has caused a slow-down in stock price; since the New Year, NVDA shares are up just 3.3%.
Short interest has increased by 17.7% since the company's last earnings release while the stock has drifted lower by 18.7% from its open following the earnings release to be 16.1% below its 200 day moving average of $245.09.
Option trade to consider: Buy the NVDA DEC 21 2018 190.000 PUT at approximately $9.60.The Result So Far………
The graphics processor designer saw third-quarter sales rise 20% year over year, landing at $3.18 billion. Earnings jumped 38% higher to $1.84 per diluted share. The analyst consensus had been calling for earnings of roughly $1.71 per share on revenue in the neighborhood of $3.24 billion, so it was a mixed bag.
CEO Jensen Huang explained how severe the hangover from the earlier cryptocurrency boom turned out to be.
We were surprised, obviously. We're surprised by it as anybody else. The crypto hangover lasted longer than we expected. Prices started to drift down and we expected to come down much more quickly than it did. When it went down, we expected demand to come up much more quickly than it did. And so I think the channel wanted to protect its price. People were uncertain about crypto.
So, for “Earnings Predictions” members, who managed to execute this trade recommended by Stock Options Made Easy; potential profits of 220% were available during the day.
Entering the option trade at a cost of $9.60 or less; and the price of the option reached $30.75 yesterday; a profit of 2209 was made. Therefore, one options contract would provide a profit of $2115.00.
A NICE FINISH TO THE WEEK!
NVIDIA hopes to have worked through the industry's excess inventories by the end of the fourth quarter, setting the stage for renewed growth in calendar year 2019 and beyond. Next-generation games such as Electronic Arts ' Battlefield 5 support the Turing chips' new ray tracing functions out of the box, perhaps paving the way toward another wave of system upgrades in the gaming enthusiast market.
But the slowdown over the holidays is another problem yet to be encountered! Fourth-quarter revenues are expected to stop near $2.7 billion; roughly 7% below the year-ago period's result. And GAAP earnings will be approximately $1.16 per share; which would be 35% below the $1.78 per share that was reported in the fourth quarter of fiscal year 2018.
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, but it is obvious that this was not the situation in this instance. 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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