NVDA Post Earning Trade Opportunity

NVDA Post Earning Trade Opportunity.  Last Friday, NVDA was going to open the market with Earnings Announcement.    On the strategies we talk about in the Options University is pre-earnings and post earnings trades.   With the iMTF® Indicator, we look for a trade before and after earnings.

For the pre-earnings, below is the weekly chart, we were looking at.   Price was close to a major support at 163.57 which seemed like a good opportunity but notice the yellow dots above the weekly bar for two weeks.    This was indicating over extension.    With over extension, it is not good to go bullish at all.   We could not think about bearish at all either because an instrument in over extension can remain in over extension for awhile and also because all the higher time frame where still bullish no signs of weakness.

As a result, we had no pre-earnings strategy.

The only strategy, we could do now is post earnings.  Since all the higher time frame are bullish and the stock keeps on making new high’s over and over, the only thing we could do is recognize a major support so if earnings was bad, it could reach it.

Therefore, we posted a chart on social media (see below) with the major 155.31.   If it got to the support, there were two way you can enter.

The first method would be to enter an option trade once you got to that support.   With options, since earnings would be released and price dropping, the volatility for the calls should should not be high anymore especially if you go OTM and couple of months out.

The second method is look for a bullish strategy on lower time frame once price hit the support level.   This is a confirmation strategy.

 

Below is the current daily time frame showing the price action that occurred after earnings.  It shows the key support and resistance levels based on past iMTF® levels.    Price got to the price we specified and bounced off it.    As long as this support holds, there is now a high probability for price to go back to the resistance of 163.78.

If you entered with method 1, the entry with options would be at 153.67, initial stop of 150.57, and a target of 163.78.  This would give us a 3:1 reward/risk.

If you entered with Method 2, you would have to look for a bullish opportunity on lower time frame.  Below is the 1 minute price action.   Notice price went a little below our support level.   Also, notice it consolidated at that level too.    When this happen, it tells us that there will be a “battle” between the bullish and bears.   Price will not instantly go bullish right away.

You can see from the first breakout on the bullish setup…it goes up a little and then consolidate.   That tells us that the bulls are STILL not in charge and it is going to be an “ugly” ride to the iMTF® resistance with a lot of bullish setup on the lower time frame.

Here is the current 1 minute chart.   It shows clearly the battle that is occurring with the bulls have a slight advantage since the support has held so far.

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About the Author Manesh Patel