For most of the summer months the market has been making new all time highs on a weekly basis. The move higher has been lead by many of the tech names like AAPL, AMZN, FB, NVDA. With so many names at all time highs, there are many opportunities to place trades that will benefit from a slow down or even a reversal lower.
One of the overbought names that we are looking at for this week’s Options Trade Of the Week is NVDA. The question becomes what makes the NVDA chart overbought? We have created a tool called the Pulse indicator that helps quickly identify whether a market is overbought or oversold. In the video below you will see a demo showing how we use this indicator on a regular basis. It’s another tool that helps put the odds in our favor long term and also shortens the amount of time required on a daily basis to look a the charts.
For this week’s Trade Of the Week we will be looking at selling a call spread on NVDA using the Sep 14 weekly options with 14 days left to expiration. We will be selling the 285/287.5 call spread for $.90 or $90 per spread. This has us selling the 285 call and buying the 287.5 call at the same time to make sure we are in a risk defined trade.
For a complete break down of our Trade Of The Week make sure you review the video below. We will cover the details of how we are placing trade trade including how we plan on managing it from start to finish. Feel free to contact me directly with any questions you might have. Mike@netpicks.com.