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Volatility has returned as the Magnificent 7’s valuation is finally repricing. I want to embrace the volatility and produce income based upon the higher premiums investors are now paying for downside protection. I want to use options on the crown jewel of the Mag 7, Nvidia (NVDA) . Nvidia, the leader in the AI chip space, has been the backbone of the Mag 7’s performance over the past couple of years, with its stock surging nearly 1,800% over five years due to the AI boom. The “repricing” of the Mag 7 reflects the market reassessing their valuations which in turn is creating opportunity on the high beta stock Nvidia. NVDA had its worst post earnings reaction since August 22, dropping roughly 9% intraday which erased nearly $350 billion in market cap on the day. For perspective, Johnson & Johnson (JNJ) is a $350 billion market cap company. NVDA 5D mountain Nvidia this week With NVDA nearly 20% off its all-time highs, I want to use options to express a bullish view after what looks like a post earnings shake out. The trade Selling a put spread in the high-flying name will produce an income stream and also potentially establish a long position in Nvidia. However, I want to define my risk in this trade in the event further liquidation of the GPU chip making King turns lower. Trade (Selling a put spread): Sold the 3/21/2025 $118 put for $6.50 Bought the 3/21/2025 $110 put for $3.50 This spread was established when NVDA was roughly trading $118 DISCLOSURES: (Jeff owns the spread.) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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