Interested to hear people’s reactions to this idea. I am sitting on 3600 NVDA shares at avg price of $116. I have about $600K sitting in cash that I can deploy. Thinking of buying 2400 more shares Monday morning at $102 (or whatever it opens at). So I will have 6000 with a net cost of about $110. I could then sell 60 covered call contracts below:
OCT18
$110 SP = $30,450 premium
$115 SP = $20,700 premium
$120 SPM = $14,220 premium
NOV15
$115 SP = 34,050 premium
$120 SP = 25,950 premium
$125 SP = 20,100 premium
What would you do if you owned 3600 shares at $116? Would you buy more to lower your AVG cost? Then sell CCs against these? One theory I have is that the market is going to be pretty funky through the election, so maybe just sell Nov CCs, which expire after the election but before the next earnings date.
I’ve also been selling puts to make a little premium and pick up shares at the price I want but the premium is not much and it ties up my $ until the ED.
Strategy on NVDA? Buy more to lower avg cost to sell CCs?
byu/SouthEndBC inoptions
Posted by SouthEndBC
8 Comments
No, go buy other stocks that are at a cheap price but higher value. Everyone wants to bet on the new players. Go get you some established player like LeBron James (less volatile) .
I’d wait atleast till 90 or less range. It’s going to get there.
It sounds like you may be trying to cover unrealized losses by continuing to trade the asset. If you had a strategy when entering the position, assess whether it’s still valid. If the strategy holds, you might consider adding to your position or accepting more risk. However, if the strategy has been invalidated, it’s crucial to exit at your stop-loss level. Constantly switching directions especially with a volatile asset such as NVDA without a clear plan rarely leads to successful outcomes.
Depends on the portfolio. I’d probably sell some shares, especially if this is a huge chunk of the portfolio.
It puzzles me that people with large accounts ask these kind of questions here. Maybe they don’t realize that this sub is overwhelmingly populated by people with four figure accounts.
The suggestion is no more than 5 percent in any one stock ticker. Exceptions for index etfs and if a person is saving enough from wages to replace the entire account in two years.
I always ask what was the plan going in? If no plan, definitely cut down the position size. If the plan was only for upside same thing.
There is often a psychological desire to avoid taking a loss. I’ve seen many a trader add to losing positions and a manageable loss becomes crippling. Number one mistake is trading too big so unless we are talking $10 million account size, any averaging down is headed that way.
Always have a plan. If someone is asking for basic advice keep positions small.
Everyone has a theory here…
why don’t you just sell ATM puts instead
You can sell the 95p 9/27 exp and sell the 110c 9/27 exp 24x for $13,560 credit. Then sell 12 more of the 110c 9/27 exp for an additional $3,600 credit. If the stock stays between the strikes you have created a nice little dividend.
I would sell .20 delta covered calls as my retirement income if I owned that many shares.