Nvidia Protection Play into Earnings

Today’s MRKT Call is Presented by Fidelity

Today at 1 pm, Guy Adami and Dan Nathan will go live on YouTube to discuss:

• Nvidia Protection Play into Earnings

• Stock Replacement Strategy

• Strategists Upping S&P Targets

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SHOW NOTES:

Buy May 24th Weekly 1020/880 Collar for No Cost

• Sell to open 1 May 24th weekly 1020 call at ~$14.50

• Buy to open 1 May 24th weekly 880 put for ~$14.50

Break-Even on May 24th Close (Friday):

• Profits of up to 75 between 945 and 1020 with max gain at 1020, Stock called away at 1020. up ~8%

Losses of up to 65 between 945 and 880 but protected below 880, down about 7%

Hedge Rationale:

• A long-holder would do this if they were more concerned with the downside of post-earnings than the upside. The hedge benefits from skew to the calls, offering $75 of upside vs only $65 of downside for no cost.

Buy July 55 – 60 call spread for ~$1.70

• Buy to open 1 July 55 call for $2.95

• Sell to open 1 July 60 call at ~1.25 cents

Break-even on July expiration:

• Profits of up to 3.30 between 56.70 and 60, max gain above 60

• Losses of up to 1.70 between 56.70 and 55 with max loss below 55

Trade Rationale and Management:

• This trade idea risks about 3% of the stock price and has a break-even up of 5%. Again, this makes sense for longs who want to define their risk from here and play for a new all-time high in the coming months.

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