NVDA Report #5 – Final Wrap Up and Free Trade! 🎁

BY HANNAH SELNER

June 18, 2024

Here we are, eleven days out from Nvidia’s Stock Split on June 7th…. Aaaannnnd! It’s about what we expected, the excitement has fallen out of the headlines.

Immediately following June 7, NVDA popped around $10, and now it’s leveled out around the $131-133 level where its sat for a few days:

To be totally honest, Nvidia has largely become a punchline. Before you take offense or disqualify that statement, know that I mean that in the most innocent of ways. Is it absolutely a powerhouse stock that is approaching (and perhaps soon surpassing) Microsoft as the top stake in the S&P 500? Yes.

Is it also used by cheap, boring writers at every turn to grab your attention in a catchy Subject Line and direct you to “the next best stock,” which you likely have to buy to learn the name of? Also yes.

We established Option Pit Research to be the opposite of that.

I love a quippy Subject Line as much as the next person, but the intention of this newsletter (and I’ll keep saying it) is to cut through the quips and bring you – translated from the confusing, bottomless pit of “trader talk” – the best ideas and most important happenings from Option Pit’s traders.

Because when Mark, Andrew, Licia and Frank are excited, we should be excited. That’s when we can make money.

So without further ado – our 5th and final installment of the Nvidia Research Series, culminating in a free trade for Option Pit Research Readers…

Let’s Recap The Biggest Lessons from Nvidia

This isn’t your mother’s recap, I’ll give you the quick n’dirty what we need to remember, because it’s going to help us make money in the future.

Takeaway #1 = Once stocks announce they’re going to split, they are more than likely to go on a tear higher; meaning we want to either: Buy the stock, or go long calls.

We saw this in:

Amazon
Tesla
Walmart
Apple
And right now… we’re watching it in Chipotle (which is scheduled to split 50:1 on June 26th), and has rocketed $300 in the last 6 days alone

They tend to run higher ALL THE WAY into their split date, so depending on your trade, you could hold it almost to the split itself. Of course, all your trades are your own, you know the drill. But the data is there – this is how stocks behave 99% of the time. (Bonus points: Anyone remember our 1% example that DIDN’T follow this behavior? Hint: It was back in February, 2022).

Mark just netted a nice little profit here on some CMG calls that ran from $50 a pop last Thursday to over $125 today.

AND… This is exactly what has led us to the free trade you’re going to receive as a member of Option Pit Research – which – is NOT going to be on Nvidia. If you’re sad, too bad. You know what helps make you happy? Making money on a play… and we found a better one since Nvidia has settled into “lazy river” behavior.

Which brings me to our second Takeaway…

Takeaway #2 = We don’t trade stocks on FOMO (that’s “Fear of Missing Out” for those of you who are 65+ and don’t have young grandkids to keep you hip, I gotchu.)

I say this because… it’s a lesson we all need to be reminded of. It is SO EASY to get suckered into a position you don’t actually want (or have a good trade plan for) because “everyone’s talking about it” or you read a Reddit thread from some dude with a “mortal lock” trade that can’t lose.

I get it, we’ve all been there. And Nvidia is the KING of FOMO. But, we’re not in high school, and as Andrew likes to say: “It’s only a boring trade if you hate making money.”

That’s why we’re putting Takeaway #1 to work.

Our Free Trade: It’s NOT NVDA

It’s Broadcom (Ticker: AVGO).

AVGO By the Numbers:

Split Announcement Date = June 15th (3 days ago)

Split Execution Date = July 15th

Split Ratio = 10:1

And a chart:

AVGO’s huge gap up after June 12th was on positive earnings and an announcement of the upcoming split. And – surprise, surprise – in typical pre-split fashion, it’s run higher; almost $400 higher.

Mark and I expect AVGO’s run higher to continue into the July split date, as we’ve seen with so many of the examples above and over the last few weeks with Nvidia.

We’re taking what we’ve learned – the trend we’ve found – and putting it in play!

That’s Why Our Option Pit Research Free Trade is =

AVGO July 12, 2024 1900 calls for less than $53 per contract

Our Target is $100/contract, looking for a 100% winner

If you want a less expensive version of this trade, I got you covered.

For half the cost of the trade above: AVGO July 12, 2024 1900-2100 call spread for $33 dollars a contract. You’ll buy the July 12, 2024 1900 calls, sell the July 12, 2024 2100 calls for an average cost of $33 a contract. Target for this “cheaper” trade is $50 a contract, also around a 100% win.

We’ll be keeping track of the trade ideas from Option Pit Research in its own portfolio, COMING SOON, stay tuned.

I hope you’ve enjoyed reading and learning about this as much as I’ve enjoyed writing it.

If you haven’t signed up for the event Mark and I are hosting on Thursday at 1pm, you really should be on that list – this event is going to be HUGE.

As always, you know I love your feedback.

Send any thoughts, ideas, or new topics you’d like me to cover in Option Pit Research to [email protected].

Talk Soon,

Doesn’t mean you can skip my emails tho 😉

Talk soon,

P.S. For those of you try-hards answering the bonus (Don’t worry, I’m one of you, too)… the 1 stock that didn’t run up into its split was Microsoft. They announced their split over 6 months before it occurred.

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