BY ANDREW GIOVINAZZI 

August 24, 2023 

Yo Pit Crazies,

How do you price a company that is growing at 80% a year when the value is already a trillion dollars? The answer is higher.

As I see it after the close, Nvidia Corp (Ticker: NVDA) is lifting all ships after hours as the animal juices get flowing again.

For today, what reigns supreme? Bank downgrades or companies growing and innovating.  I am going with innovation. I added a sideways play on the NVDA earnings, and I’ll share on the jump.

And how did the market price NVDA?

Traders Were Looking for a $50 Point Move in NVDA

The NVDA Aug25 500 calls priced in at $11.60. Now, you would say that they should make some money on a $37 move, but they might not.

Implied vol on the strike was 160%. I estimate that the IV will drop by 80-90 points today on the open.

VEGA per contact is .13 so 80 x .13 is 10.40 all but wiping out the move from delta which is .33 x 37 or !2.21.  The call buy should make around $2.0 on the $11 investment.  Not bad but a lot to risk for $2.0.

We shall see!

I did buy strangles in Taiwan Semiconductor Manufacturing Inc (Ticker: TSM) in the Easy Trade Button and they should play well today. TSM was up a bunch yesterday and it should see $100 this week.  On the other hand, I wrote in the Pit Stop yesterday that traders seemed to underprice the SPY straddles for this week. I thought just over 1% for staddle was low, let’s see if I am right.

Semiconductors are saving the market. Hot dang, because options love a bull market.

To Your Trading Success,

AG