NVIDIA Corporation (NVDA) is engaged in visual computing, enabling individuals to interact with digital ideas, data and entertainment of branded products and services offering processors to original equipment manufacturers. The stock is currently trading around $20.33 at the middle end of its 52 week range of $16.77-$23.60. The stock has been performing inline with the market this year rallying 1.7% year to date. NVDA is scheduled to report earnings after the closing bell today, and the stock is down $0.25 or 1.21% on the session ahead of the close.
Over the past 11 quarters NVDA has rallied on earnings day 7 times with an average move of 4.49%. The stock appears slightly bullish on a chart going into the release having traded below the Ichimoku Cloud since July, but rising up to the cloud on the daily bars. Over the past 11 quarters NVDA has rallied on earnings day to the nearest expiration 7 times with an average move of 4.92%. Investors are mainly focused upon the newly announced acquisition of TransGaming Inc.’s proprietary cross-platform portability technology to expand the gaming sector of the company. The company has also experienced increasing revenue, but not enough to keep up with the consensus mark. With the stock trading below the cloud, great earnings history and mixed news it is hard to justify anything but a long or short position in NVDA.
The options market is currently implying a move of around $1.53 or 7.5% in NVDA by the end of this week giving us targets of $18.80 and $21.86.
Trade: Sell this week’s 19-20.5-22-20.5 Iron Butterfly for $0.98
Risk: $52 per lot
Reward: $98 per lot
Break Even: $19.52 and $21.48