Basically i want to short NVIDIA. Targeting 30%+ dump, probably even more, think it will dump from here(366$) to below $250. I am pretty sure this will hapen before end of year, perhaps in the next 3 months, but it's hard for me to guess the timeframe. I think it should for sure happen by the end of year. I only margin trade futures, so i enter, i have a stop loss and i have a price target. I know much i am risking and i know how much i am going to get. But i have bad experience randomly shorting uptrends, i have been stopped at the exact top before. That's why i want to go with options. Does anyone have a recommendation, what kind of options should i buy and what expiration date. But mainly my question is, how much will i be getting if right? What's the risk to reward? What strike price is best? What's the difference if i buy puts with say 270$, 260$ or 250$ strike price? Is the pay-off bigger? By how much?
I don't know what the implied volatility means. Isn't the vlatility low right now? I mean everything is grinding up slowly/stalling. At the time of the event, i would assume it would be a sharp dump and high volatility though yes. Is selling a call in the money, same as shorting with a stop loss? As far as i understand selling options, your risk is unlimited, same as with shorting. Would it be the same as using a stop loss? Isn't selling options same as shorting in that way - risk is unlimited? Or do i sell a call with 400$ expiration and if it goes above i close position - which would be same as shorting with a 400$ stop loss then?
you could sell a wide call credit spread so if market rallies your risk is limited. You need to understand implied volatility as you might be right about direction and still lose money. For instance the vix is at 35 much higher than before Covid when it was in the teens.
i would be real careful shorting NVDA. it did have a parabolic upward move similar to AAPL but i would be very careful. NVDA does seem to drop as soon as they release earnings but seems to always make a very quick recovery. example, it may drop 10 points after hours and fully recover during the conference call only to drop another 10 points at the open and recover again. fundamentally nvda is solid.
buy puts. unless you know exactly what you are donig, don't sell calls. here's a link to an options calculator https://www.optionsprofitcalculator.com/calculator/long-put.html
What you're asking is equivalent to "I'm about to race this 2000HP Formula One dragster - how does this gas pedal thing work?" The only right answer is "don't do it until you've learned enough not to kill yourself." I don't mean to sound snarky, but unless you learn exactly what implied volatility means, you have no business trading options. Ditto calls/puts and ITM vs. OTM. These are the very basics of options. I'm not a huge fan of the whole OptionAlpha approach, but the intro course is free and sufficient for the basics: https://optionalpha.com/members/tracks/beginner-course
IMO: The difficult/illusive piece of this is quantifying what you do know vs what you don't know. The variables are Time (need to nail down the time window), price (this is probably the easiest part, but perhaps a price range will be a more forgiving estimate), and the most illusive, the implied volatility at your target time (or range of IV). For example, If you target 120 days from now (Oct 26th) and expect the price to decrease 30%, and expect the ATM_IV at that time to be +/-20% of where the current NVDA Term structure is pointing for that date, you may find the following Simple long option candidates (Sorted by Return on Risk order): Last for NVDA = 366.20 @ 20200628.0841 CRITERIA Used: Time?=Now->20200628.0841, term =NVDA201218, Symbol= NVDA, days=120, uChange=-30.0%, ivChange=+0.0% Per leg Slippage->0.05, MiniBA spread:50, Minimum BID:0.01, Commission:0.65, Candidates->20 Target Min Days from Expiration->7 Target date = 20201026 is on day# 1 of the week (Mon=1...) Database is "tda_temp" U= 365.95, Target U-> 256.17 ATM IV= 0.49, Target ATM-IV-> (0.47 -> 0.47)0.51 -> 0.51) Uncertantity specifications: Time Band=0 Price Band=0 IV Band=0.2 Results of evaluation listed below: Simple long options Opra ROR % Open Close P0 PTMIN PT PTMAX NVDA201218P315 130 26.60 61.14 26.55 61.19 63.87 67.11 NVDA201218P330 129 32.60 74.83 32.55 74.88 76.80 79.40 NVDA201218P335 129 34.72 79.57 34.67 79.62 81.34 83.76 NVDA201218P325 129 30.68 70.18 30.63 70.23 72.40 75.21 NVDA201218P340 129 36.85 84.29 36.80 84.34 85.80 87.96 NVDA201218P345 128 39.05 89.10 39.00 89.15 90.42 92.37 NVDA201218P320 128 28.78 65.60 28.73 65.65 68.05 71.06 NVDA201218P350 127 41.30 93.93 41.25 93.98 95.05 96.79 NVDA201218P355 126 43.65 98.82 43.60 98.87 99.79 101.37 NVDA201218P310 124 25.28 56.76 25.23 56.81 59.76 63.22 NVDA201218P360 124 46.30 103.73 46.25 103.78 104.54 105.93 NVDA201218P365 123 48.80 108.65 48.75 108.70 109.32 110.53 NVDA201218P305 122 23.70 52.53 23.65 52.58 55.82 59.50 NVDA201218P370 121 51.35 113.61 51.30 113.66 114.20 115.30 NVDA201218P375 119 54.05 118.56 54.00 118.61 119.05 120.00 NVDA201218P300 119 22.05 48.38 22.00 48.43 51.93 55.81 NVDA201218P380 117 56.90 123.53 56.85 123.58 123.94 124.77 NVDA201218P385 115 59.80 128.51 59.75 128.56 128.85 129.58 NVDA201218P295 114 20.68 44.35 20.63 44.40 48.13 52.18 NVDA201218P390 113 62.67 133.49 62.63 133.54 133.78 134.40 --------------------------------------------------- The Open is your entry cost with commission and 5cent slippage, the close is the expected Target price with commissions and slippage on the exit. PT is the expected price at target date with your assumptions, where PTMIN and PTMAX compensates for the uncerrtanity (+/-20%) of the IV. The PTMIN col is used for the close pricing. ---------------------------------------------------
BUY <n> BUTTERFLY NVDA 100 18 DEC 20 270/280/290 CALL @.03 LMT MARK, would "could be a good bet, if your intuition comes to pass".