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☕ Three strategies to play Nvidia earnings today

Nov 20, 2024

Good morning! 👋

It’s the Nvidia show today and, frankly, not much else matters in the scheme of things.

So, let’s stick to our knitting.

Here’s my playbook.

It’s game time

Nvidia reports today and expectations are off the charts, pun absolutely intended.

The numbers almost don’t matter.

And what does?

Two things…

Jensen’s voice; and,
Ongoing demand

Let me explain.

I place a premium on CEOs because my experience has been that strong, visionary leaders make a huge difference when it comes to profits.

Both for the company and for the investors who get on board.

Long time readers will recall that I first latched on to Nvidia in late 2011 and early 2012 when the company announced the Tesla K10 GPU Accelerator.

What caught my attention was the design.

The “Tesla K10” – funny how names work out, eh?! – was a material change in direction from gaming and graphics to machine learning, scientific computing and big data analytics.

The way Jensen spoke about it struck a chord.

That’s when I first picked up on his vision and his willingness to invest deeply in future technologies before they become mainstream “aware” – something that’s now talked about and studied widely in business schools around the world.

Here’s a quick video that speaks volumes about how he approaches things.

Tip O’the Hat, btw, to Evan at @StockMKTNews who also picked up on this.

I expect Nvidia’s numbers to be a homerun with a glimpse into the next “next” generation chipsets.

My guess is we’re also likely to hear a bit about quantum computing and what just may be the cusp of something I’ve termed “inferential AI.”

Nobody else I am aware of is talking about this… yet.

Keith’s Investing Tip: Many folks make the mistake of thinking in “current” terms but the key with a company like Nvidia is to look beyond that and, specifically, for how it’ll “extend” innovational excellence. At the same time, you’ve got to allow yourself to think beyond what you know and contemplate what you don’t.

I’m thinking we could see a $1.9B - $2.5B+ beat.

AI, to a point I have made many times over, may well be the biggest investing opportunity in recorded human history. Every business on the planet will adapt, adopt or die.

Investing accordingly is extremely important, or you will fall behind.

There’s just no two ways about it.

3 trading and investing strategies you can use today

Wall Street is jonesing for a fight and some quick profits.

I expect big traders to set up a fast head fake, meaning they’ll rapidly run prices one way only to reverse hard in the other when they’ve fleeced the weak hands and the scared money. The overnight markets may be a rocket ride, in fact.

Definitely not for the fainthearted.

I’ve talked about this quite a bit in the past, so I won’t repeat that today.

Nutshell version… if prices run higher into earnings, chances are the first swipe will be lower quickly to clean out the stops. If prices drop into earnings, it’ll be a sharp move lower to scare out the weak hands then an immediate run upside.

If you’re a trader, an ATM straddle within the last 30 minutes could set you up nicely.

The biggest block of open interest is at $150 by an order of magnitude which suggests that’s where the game will play out or the line in the sand will get drawn. I had to double check my eyes and my coffee… 189,564 contracts in the November 22 expiry alone as I type … yowza.🤦

A Straddle, in case you are not familiar with the term, is an options strategy in which an investor holds a position in both a call and a put with the same strike price and expiration date. It’s often used in situations like this where the direction is unknown but the possibility to play both sides exists.

If you’re an investor, a downdraft tends to make volatility rise. That’s often an opening to Sell Cash Secured Puts as a way to go shopping and get paid for your trouble. I can also see a few LowBall Orders working nicely to buy at a discount if the markets want to hand you that opportunity. Thinking low $130s here, for example.

I believe the path of least resistance is sharply higher over time, either way.

Nvidia has returned 187% over the past 12 months and a jaw dropping 2,655% over the past 5 years versus 29% and 89% respectively from the S&P 500 over the same time frame.

If you’re worried you’ve missed it, don’t be.

AI is still very, very early innings… something I also expect to hear from Huang today.

Btw, history suggests that there are 10-15 “Nvidias” out there right now in various stages of maturity. The One Bar Ahead® Family is tracking and on board with several, in fact. If you’ve got this covered, awesome… every investor should but very few do. If not and you’d like some help, I’d like to toss my hat in the ring.