Note: Jeff Brown has been tracking the development of autonomous vehicle technology since 2011, when he sat in one of the earliest prototypes of what eventually became Waymo.
He believes that Tesla has been building one of the most advanced and revolutionary forms of artificial intelligence (AI)… And now, we’re just a couple of months away from Tesla’s robotaxi launch in Austin, Texas. He suspects that similar services will be available in California within months of the Austin launch.
According to Jeff, that will be the beginning of a massive profit opportunity… which he’ll explain during The Robotaxi Emergency Briefing tomorrow, April 10, at 1 p.m. ET. He’ll even share the name of one of his top picks at the event.
Go here to register for free with a single click.
Trading conditions over the past week have been difficult.
Vicious drops at the end of last week saw the S&P 500 lose 10.5% in two days. And the turmoil didn’t end there…
A massive 8.5% intraday swing in the S&P followed on Monday. Stocks rallied then collapsed due to false reports that the White House was considering a 90-day pause on imposing tariffs.
That added another layer of confusion to an already bewildered market.
But much like last week – where we picked up 22.1% and 22.6% gains in a single day – we converted this uncertainty into quickfire profits trading Nvidia (NVDA).
NVDA looked oversold, so we jumped on a quick rebound to bag a 23% gain.
So let’s check in today to see how we did it…
Sharp Counter-Rally
When markets go through a brutal sell-off, a brief, sharp counter-rally often follows.
Sellers become exhausted for the moment, and bargain hunters swoop in to pick up cheap or “undervalued” stocks. That surge in buying momentum can cause stock prices to jump quickly.
This scenario appeared likely when stocks tanked heavily on Friday.
NVDA and several other Magnificent 7 stocks were extremely stretched to the downside. NVDA was down around 36% from its January high when we opened our trade.
Plus, the Relative Strength Index (RSI) was at one of its most oversold levels in three years (red circle). So we bought a call option on Friday to capture a rebound. A call option should increase in value when the underlying stock rallies.
Nvidia (NVDA)
Source: eSignal
The big intraday swing on Monday caused volatility to increase even further. That pushed option premiums higher too.
That plus NVDA’s swing higher enabled us to close out our trade on Monday for a 23% gain in just one trading day.
A Winning Strategy
Options can be a fantastic way to position yourself for these types of moves.
With a call option, I’m buying a ticket to participate in a rebound. And I always know the maximum I stand to lose if the move doesn’t go my way. The price I paid for the option(s) is the most I’m risking.
Better still, I can choose an option that suits the maximum dollar amount I want to risk in the trade.
For example, in this trade, we paid $3.05 for the call option. That equates to $305 per option contract (each contract represents 100 shares). So that’s the maximum I risked with the trade.
|
Free Trading Resources Have you checked out Larry’s free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out. |
Even if I got the trade wrong and NVDA kept falling, the most I could lose was $305 per contract. Compare that to buying shares outright – the stock could technically go all the way down to zero.
Put simply, buying options enables you to take part in a move while tightly managing your risk.
This year alone, we’ve already generated 25.6%, 46.9%, 22.6%, and now 23% gains on NVDA using options. And we’ve managed many other gains besides, even as tariff announcements led to market shakeups.
I wanted to share details about how we’ve managed to profit amid this tariff chaos. So I recently recorded a briefing where I discuss three key signals I look for in moments like this. You can watch here.
As you’ll see, with my strategy, options can be a great tool to generate quick profits… especially in volatile markets.
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict