How can I buy NVDA and TSM at discounted prices?

My trading plans for this week:

1. $NVIDIA Corp(NVDA)$

Unlike the bubble in 2000, $NVIDIA Corp(NVDA)$ has a strong moat. It's not just about the chips but also the entire CUDA ecosystem.

During market downturns, selling put options on NVDA is a good choice.

Tips: When selling put options, make sure you have sufficient margin and don’t leverage.

How to choose the strike price?

I focus on two key points:

Forward EPS and PE

On NVIDIA's financial page, you can see the 2025 EPS of 24.5 and a forward PE of 35.73.

Note that the forward EPS estimate may undergo significant revisions with quarterly reports.

$Tesla Motors(TSLA)$ is a typical example.

Initially, it is projected that the EPS for 2023 would be above 5. However, it has been continuously revised downward, with some major institutions even predicting Tesla's EPS for this year to potentially be negative.

PE over the past 5 years

On the analysis page, the current PE is 76.64, with a mean of 79 and a low point of 36.12 (note: this is historical PE, not forward PE).

Therefore, for strike price, I would choose a range of 600-650, below the starting point of the significant rebound after this financial report, corresponding to a forward PE of around 25.

Tips: Keep a close watch on the competitive landscape and EPS forecast adjustments for NVIDIA.

2, $Taiwan Semiconductor Manufacturing(TSM)$

I'm bullish on the demand surge driven by AI development, which will outweigh geopolitical tensions and the negative impact of declining Apple sales.

TSM will be one of the focal points for future positions because of its more comfortable competitive landscape.

So, how to choose the strike price for TSM?

Similarly, based on an appropriate forward PE. As shown in the graph below, the average forward PE over the past 12 years is 17 times, with one standard deviation below the mean being 14 times,

Choosing a forward PE of 14-17 times * expected EPS in 2025 of 7 = 100 to 120.

Tips: Excellent companies with forward PEs at historical lows often represent good buying opportunities.

TSM's forward PE over the past 12 years

3. Other Plans

Selling put options on $Advanced Micro Devices(AMD)$

Will AMD's open-source ecosystem ROCm be able to capture more market share?

The entry position set for AMD is lower than that for NVDA, a more conservative approach.

Selling call options on $Direxion Daily 20 Year Plus Treasury Bear 3x Shares(TMV)$ ; selling put options on $iShares 20+ Year Treasury Bond ETF(TLT)$

Interest rate cuts are coming this year.

4. Final question

Why sell put options instead of holding the underlying stocks?

The joy of buying discounted stocks. However, the forward PE corresponding to the current stock price lacks sufficient safety margin.

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