Ever watched a rocket take off? That’s Nvidia’s stock since it announced a 10-for-1 stock split last week, riding the wave of its stellar earnings report. But let’s cut through the noise and break down what this split means for you. Come June 7th, Nvidia’s stock price will be chopped by ten. If it’s trading at $1,000 per share, it’ll drop to $100. For every share you own, you'll get ten shares. Simple math, but the implications are huge. Why It Matters: 1. Accessibility: Lower stock prices make it easier for everyday investors to buy in. More people can afford to buy shares, which means more money flows into the stock, boosting its liquidity. 2. Options Adjustments: Holding options through the split? Your number of contracts will multiply by 10, and the strike prices will adjust accordingly. For instance, a $1,200 call option will become a $120 call option, but you’ll have ten of them. 3. Price Adjustments: For strike prices that aren't cleanly divisible by 10, you might see half strikes or other unconventional values. Keep an eye on the theta and gamma of these options:
The Big Question: Is This a Buying Opportunity? With shares at a nosebleed high of $1,154.92, I'm expecting a breather. Here’s a trade idea I’m eyeing: The Trade: Consider a long debit put spread – long the 1160 put and short the 1140 put in the June expiration with 30 days to expire. This slightly bearish/neutral strategy has a 56% probability of making 50% of its max potential profit before expiry. Plus, it generates $0.70 of positive daily theta – that's money in your pocket as time ticks by. If I enter at today’s closing price of $11.10, I’m taking profits at $16.65. That's how you trade strategically with options. Good trading, and remember – rent's due. Josh Belanger
Disclaimer: This email is for educational purposes only. I’m highly skilled and experienced, but every trade carries risk. Do your own research or consult with a professional before making any trading decisions. You're currently a free subscriber to Josh Belanger. For the full experience, upgrade your subscription.
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Rabu, 29 Mei 2024
Nvidia's Stock Split: What You Need to Know
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