$NVIDIA Corp(NVDA)$ , known as the "AI leader", fell sharply by 6.7% on Monday trading, the largest single-day decline in two months, and entered a technical correction stage.
At present, NVIDIA has fallen for three consecutive days, falling more than 16% from last Thursday's high. The company's market value has fallen back to below US$3 trillion, ranking third in the US stock market.
Affected by this, the $S&P 500(.SPX)$ fell to a new one-week low for three days in a row. However, looking at sectors, the energy, financial and public utilities sectors performed well, each rising by about 1%. A brief break for large U.S. technology stocks may bring hope to other sectors.
"Nvidia is like a rocket ship. When things are moving so quickly, you don't want to be the last one out," said Michael Purves, CEO of Tallbacken Capital Advisors. "People want to invest in this stock market rally. If they sell When looking at Nvidia stock, they are most likely to buy value stocks and cyclical stocks.”
Which value stocks are worth paying attention to?
With its outstanding record of raising dividends for 62 consecutive years, Coca-Cola has become a benchmark for investors seeking passive income. Other similar companies include Walmart, Colgate, Procter & Gamble and Johnson & Johnson. Investors don't have to worry about falling demand for these companies' products; their steady cash flows will push their dividends higher. When the interest rate cut cycle comes and U.S. bond yields fall, these stocks will rise.
"Stock God" Buffett's Berkshire Hathaway recently purchased more shares in Occidental Petroleum, and his latest shareholding increased to nearly 29%. Regulatory filings show that Berkshire bought Occidental Petroleum shares in nine trading days from June 5 to Monday, totaling an additional 7.3 million shares purchased at prices just below or above $60.
This purchase brings Berkshire's holdings in Occidental Petroleum to more than 255 million shares, a shareholding ratio of 28.8%. Berkshire has become Occidental Petroleum's largest institutional investor to date.
The "Oracle of Omaha" said in an interview with the media in March 2022 that he started buying shares of Occidental Petroleum after reading the transcript of the company's earnings call. “I looked at every number in the earnings report and bought everything I could the week after,” he told CNBC. He added that Occidental CEO Vicki Hollub “is managing the right way. company".
Buffett's continued investment in oil stocks in recent years highlights his optimism about the long-term development trend of the oil industry. He seems convinced that even as more and more countries set ambitious targets to reduce carbon emissions, the world still needs oil, lots of it. He has said that oil will become an even scarcer investment energy source in the future as production capacity is difficult to increase.
In addition to Coca-Cola and Occidental Petroleum, Bank of America in the financial industry is also worthy of attention. The Federal Reserve presented a three-page document to other U.S. regulators outlining potential changes to its bank capital reform plan, people familiar with the matter said. This adjustment will significantly reduce the burden on Wall Street banks. Driven by the good news, Bank of America's stock price has also reached a high point recently.
For high-quality blue-chip companies such as Coca-Cola, Bank of America, and Occidental Petroleum, using the put option selling strategy is more suitable for the current market.
Short Put Selling a put option
When investors expect that the stock price will not fall in the future, or will rise moderately, they can choose to sell put options and obtain option premium income.
The profit from selling put is the option premium. When the stock price drops rapidly beyond a certain range, a loss will occur from selling put. The maximum loss is the exercise price minus the option premium. Since the option seller is the friend of time, the passage of time is beneficial to the option seller. If you sell a put with a reasonable exercise price, the probability of making a profit is not low.
Occidental Petroleum Put Option Selling Case
Take the put option with an exercise price of $63 and expiring on July 19 as an example. Selling a put option earns a premium of approximately 105.
At settlement on the July 19 expiration date, investors will receive the full $105 premium as long as Occidental's share price is above $63. Relative to Occidental Petroleum's current price of $63.25, a $105 premium would represent a return of 1.66% for 100 shares of Occidental Petroleum.
If Occidental Petroleum's stock price plummets below $61.95 (63-1.05) at the expiration date of July 19, investors will begin to incur losses, and the loss will be the same as holding 100 shares of Occidental Petroleum.
In the case of Occidental Petroleum above, you can see how attractive option premiums are. Many people specifically use the Short Put strategy to earn option premiums. But at the same time, selling put options also has the function of buying the bottom. If an investor likes a stock and wants to hold it for a long time, but feels that the current price is too expensive, he can also use the method of selling put options to build a position. If If the stock falls below the exercise price, investors can obtain the stock at a cheaper price. If the stock does not fall, investors can also obtain valuable "premiums." Selling put options is a good strategy for the current blue chip market.
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