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☕️ Three Nvidia trade ideas

Feb 26, 2025

Howdy! 👋

The big three indices – the Dow, the S&P 500 and the snazzy Nazzy – are all up in early going. It’s the first time in five sessions according to various news sites which are quick to let us know as much.

My attention is focused on Nvidia.

Come to think of it, everybody’s attention is focused on Nvidia.

In fact, I am hard pressed to recall a more anticipated earnings call in quite some time. You can sign up to watch right here if you like.

Here’s my playbook.

1 – Nvidia: A “beat and repeat” or something else?

I’m expecting a “beat and repeat” – meaning that His excellency Chipus Maximus, CEO Jensen Huang, will very likely announce super strong numbers.

However, I also expect that “street” will take issue with growth or some nonsense cooked by scores of analysts who don’t work there, who aren’t in the boardroom and who have never worked a day in their life in high-tech.

I’m also expecting some backseat driving from those who want to “DeepSeek” this issue to death… again, most of whom have never worked a day in their lives at Nvidia or any other tech company for that matter. The clickbait artists are already in high gear, too. 🤦‍♂️

Assuming I’m correct, there are a couple different scenarios.

Admittedly there is a bit of guess work. The go-fast crowd is being very careful not to tip their hand ahead of earnings so handicapping the action is challenging.

Options were pricing in an ~8% move as of last night versus the 12-15% ahead of prior Nvidia earnings calls. As of this morning, it’s 8.42%; so not much change.

This tells me a) the go-fast crew still expects a big move, but b) chances are good that they have a tightly defined plan rather than speculating in which case vol would already be higher.

We’ve seen this playbook before several times – with Palantir, Walmart and, of course Nvidia itself - and, each time, many of you have kindly let me know that you’ve aced one trade or another. Outstanding, btw. 😀💯

So here we go again.

If you’re a trader...

Buy an ATM straddle – meaning simultaneously buying both a call and a put at the money – within the last hour of trading if prices run higher into the close. This can be a great, low hassle strategy to play along no matter which way prices go. A run higher will make the put side of this trade comparatively cheap and give it plenty of upside potential if there’s a downside move after earnings. Plan on selling/exiting tomorrow no matter what. Keep the risk small and limited to money you can afford to lose entirely.
Sell Cash-Secured Puts, particularly if prices drop mid-day or into the final minutes of trading. This jacks volatility while allowing you to collect more premium and sell deeper with a higher probability than you could otherwise. This is obviously a margin-eater because the stock is expensive at $130 or so a share as I type, so this idea may be beyond reach if you’re “thin” – meaning operating without a lot of cash reserves.
Sell a put spread deep out of the money to accomplish the same thing with similar odds of success but limit risk to the difference between the two strike prices you choose. In this case, you’ll want to make your move in conjunction with a mid-day price drop (if there is one) or execute tomorrow morning if the go-fast crowd engineers a post-earnings drop in the overnight markets which seems likely. It’s a less margin intensive alternative.

If you’re an investor...

Enter a LowBall Order to buy shares at $119 or less, roughly 8% below today’s price. Then another at $100 or so... both strikes are within statistical norms as I type but far enough down that you can confidently know you’re buying shares at a discount if the markets give you that opportunity.
Buy a single share no matter what happens. This keeps you mentally in the game and on the hunt. I will do this myself every once in a while to remain focused, knowing that every share I accumulate helps build my profit potential over time. It’s as much for psychological stability as it is profit, an aspect of investing that I don’t think is talked about nearly enough.
Do nothing. I’ve been investing in NVDA and am comfortable letting the chips fall where they may. I know that I want to own shares long term and plan on buying more regardless of price over time. So, I’m going to enjoy the view from the peanut gallery.

As always, do NOT try these trading strategies if you don’t have the chops. And if you have no idea what I am talking about but would like to learn, consider joining the One Bar Ahead® Family. Learn more.

2 – Dinosaur juice is back

BP has slashed renewables spending and is doubling down on fossil fuels – aka dinosaur juice – in what’s being billed as a strategy reset. (Read)

Not surprising.

Even the most aggressive scientists I’ve spoken with say that we’ll need decades to transition.

I’m content to invest in big oil and love the divvies.

You?

3 – Keep the tip, not

DoorDash apparently used tips to cover wages. (Read)

Now it’s gotta pay that back and then some… $17M in all according to a settlement reached with the NY AG.

The takeaway here is the that the so-called “gig” economy may not be all that like many think. I can only wonder there will be some sort of spillover into Lyft or Uber. 🤷🏻‍♂️

4 – Japanese toilets are anything but flushed

Sometimes it pays to watch the most unlikely industries, like Japanese toilet makers.

Seriously.

What most investors don’t realize is that many of ‘em make super high-quality ceramics for the semiconductor industry… and that they operate those divisions at super high margins. Roughly 40% versus just 5% for conventional crappers.

Almost tech-level stuff.

I could make the case that Toto is an interesting investment and radically underpriced if this continues and profit margins expand like I think they could.

5 – Crypto-leveraged ETF losses hit 40%

There’s a reason I repeatedly encourage investors to avoid highly leveraged ETFs like the plague except under ultra specific cases and even then, with exceptionally disciplined risk management.

Bloomberg is reporting that leveraged cryptocurrency ETF losses are approaching 40%. (Read)

There’s no such thing as a free lunch.