2/22 Daily Market Note: NVDA DCF Scenario 3 Takes Hold
Don't feel FOMO. Opportunities will return.
Note: Today’s Daily Market Note will be in the form of a trading journal where I share my thoughts from an intraday perspective for educational purposes and self-reflection.
There will be more intermediate-term and long-term ideas when the market is back at levels where I see margin of safety. Like AMAT was, for a window of opportunity.
Hey Folks -
To celebrate NVDA literally saving the entire GLOBAL market, I’m making my NVDA DCF Note which prepared members for this possibility un-paywalled until end of day Friday. Read it here. Subscribe for more Strategy.
NVDA’s earnings-inspired rally inspired similar bullish action into the SemiCap Equipment (AMAT/LRCX) names that I’ve expressed a positive opinion on with members.
One of our opinions that AMAT would do well because its recent earnings report was very strong, sending the stock to 200+. Its retracement earlier this week back to 185-187 was a brief window of opportunity to re-add to this company.
AMAT’s 3-Month Expiry Call went in-the-money for us today, and I’m taking the trade off as my profit targets for Calls is 25-35%. If gains come quickly, I am especially vigilant in taking profits.
What I’ve learned with Call Options is the saying “easy come, easy go.” If I wanted net bullish exposure again in a safer manner, the strategy is simple: convert the position back into direct shares or sell puts.
Yesterday, I did like that NVDA approached Scenario 2 in my DCF model before earnings were released (I expected dips into low 600s to be bought as part of my plan), so I thought, why not put a .5% allocation to it in my retirement and scale in another tranche if 600 was seen.
The fact that NQ (Nasdaq-100 proxy) began to rise swiftly at 330pm yesterday and NVDA did not move much gave me clues that perhaps someone knew something (?) and that it was worth a mini-shot. Given the risk profile of NVDA, which I do consider a Bubble, I believed only a .5% allocation was appropriate.
I also saw diminished possibility that NVDA would be challenged as far as 515 by the week’s end, so I sold a put on it with an expiration this Friday due to High IV.
Below, I’ll talk about my thoughts of today’s market reaction to NVDA’s earnings as well as share ideas that still have some semblance of “value” in the market.
I personally find gap-ups to be very difficult to navigate when I have my intraday hat on.
So, if you were left out of the rally, let me assure you - there is no need to FOMO. There will be more opportunities coming.
I will discuss below.