Chip stocks have their worst day in a while

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

October 16, 2024

Yo Pit Crazies,

Did you know that Option Pit tests our product to pass the CRT? Consistently Profitable, Repeatable and Teachable is the name of the game. The reason why is we want to teach our students to understand market conditions and take control of them for better money strategies.

I laid out an idea for Nvidia Corp (Ticker: NVDA) last week in the Trading Desk that the stock was going to move because it had been moving. It is known as a Two-Way Trade. I know folks think what is the big deal in that but when you look at a chart what do you do, “wow it looks like the stock is going up because of this or that.” The difference is the stock for a TWT just has to move anything close to how it has been moving lately, up or down.

The runup on Monday was a nice bonus but little did I know the Biden Adm was going to clamp down on NVDA chip sales to China. Add to that a weaker demand outlook from ASML Holdings NV (Ticker: ASML), Down $100 Tuesday, and low and behold the chip stocks staged a big selloff.

I got such good prices for my NVDA calls on Monday I could hold onto my put spreads and ramp up to a homerun on Tuesday when things got ugly for the market for once over the last two weeks.

What did I do with this Two-Way Trade?

I sold the puts yesterday and made 13% on the trade

Not a mic drop.

But oh my gosh if I sold the put spread Tuesday, it would have been 80%!! The reality is I had the choice to close the trade Monday or close the trade Tuesday because I got the expected move up, closed the calls for a 50% gain and just had a moonshot move down on Tuesday. I was risking no real dollars to hold the put spread side of the trade for 24 hours. The funny thing is I left an offer out on the put spread and it filled near the end of the day Monday. The Two Way Trade is a CRT trade and a nice intro into strangles.

Here is another batch of CRT.