Trade Alert: Earnings, 5/21/2024
Our current #1 name reports earnings this week.
Feeling Bullish
As regular readers know, we post our system’s top ten names every Thursday (with the exception of Thanksgiving, when we post them the day before).
Top Names, 5/16/2024
Our Core Strategy Our core strategy is to buy equal dollar amounts of the Portfolio Armor web app’s top ten names, put trailing stops of 10%-15% on them, and replace them with names from the current week’s top ten when we get stopped out of a position.
The Portfolio Armor web app runs the calculations every day the market open, though, and posts its top names each evening. The stock that was its #1 name on Monday is releasing earnings this week. In addition to our system being bullish on it, Zacks Earnings ESP is bullish on it, as is Estimize.
The options market is currently predicting a movement of about 7% post-earnings, but our trade will return about 200% if the stock moves 5% in our direction. Of course, if it doesn’t move that far in our direction, we’ll probably take a 100% loss on the trade. But for a coin flip, heads you win 2x and tails you lose x isn’t a bad deal.
Details below.
The Trade
The stock is Nvdia (NVDA 0.00%↑), and our trade is a vertical spread expiring on May 24th, buying the $990 call and selling the $1,000 call for $3. The max loss on 1 contract is $300, the max gain is $700, and the break even is with NVDA at $993. This trade filled at $3.
Exiting This Trade
I’m going to set a GTC order to exit this spread at $9 or $9.50, and lower that price, if necessary, as we approach expiration.
Out of our NVDA spread this morning at $9.45, for a 215% gain.