Opened a bull call spread in NVDA.
music selection: “All We Are” — Warlock
weigh-in: 185.6 (0.2) – 15 consecutive weeks without going the wrong way!
A couple of lesser trades first. I like the health insurers right now. Obamacare is becoming institutionalized and an irrevocable entitlement. I expect more reform on the horizon but for those efforts to be too little to put a serious dent in insurer revenue growth. Any industry with regulated profits and 9% annual revenue growth is a good one. Congress could cut that in half and it would still be one of the best investments in the country. Out of the major insurers, Centene has lagged the share price of the industry the most. I think that is due for a correct so I bought a long dated deep in the money call. With shares trading at 63.98, i bought the 20JAN2023 32.5 call at 32.00 a share (1 call). Time value is only 52 cents. I get roughly two to one leverage on a name that is almost guaranteed to see at least 5% revenue growth and a more less defined by law profit margin. The trade will be in force for about 500 days.
My broker delivered shares on my CBOE long calls (part of a bull spread) as the expected distribution on ex-div is greater than remaining time value. I have 700 shares at 100 dollars a piece. This gives me a margin loan. The short calls at 105 are 16.21% in the money. If those shares don’t get called away, I will hold the remaining 18 days.
Finally, NVDA has been on a tear. It has much less supply chain stress compared to the rest of the semiconductor industry and its products are in high demand. Plus, I like the chart for the next 3 months or so. With shares trading at 226.69, I bought the 225-227.5 strike bull call spread with 15OCT2021 expiry for 1.2942 per share. I bought 38 spreads at that price putting 4,918 in capital at risk for 47 days. I enjoy 0.17% downside protection in the trade. If shares close a mere 0.36% higher at expiry, I will earn the full profit of 4,582, which is good for 93.2% or 724% annualized. I really like my chances here with the underlying in a strong uptrend.
If September expiry was today, I would close 9,276 in short term trading profits for the month of September. Only DECK is realistically threatened. October is currently pacing for 11,615 in short term trading profits. That part time gig is creeping up on me in just a little over 30 minutes so I’m going to go prepare for my zoom calls.
Devour your prey raptors!