Options Strategies for Trading Nvidia's New Chips and Record-High Rally

Nvidia Corp. Chief Executive Officer Jensen Huang announced a raft of new chips, software and services, aiming to stay at the forefront of artificial intelligence computing.

Shares fell 0.46% in overnight trading though Jensen unveiled more powerful graphics cards. Nvidia stock notched a new record closing high on Tuesday, closing at $149.43, up 3.43%.

At CES 2025, a major annual tech conference in Las Vegas, CEO Jensen Huang laid out how the world's second-most valuable firm is bringing technology that powers its lucrative data center AI chips to consumer PCs and laptops.

He also introduced what Nvidia calls Cosmos foundation models that generate photo-realistic video which can be used to train robots and self-driving cars at a much lower cost than using conventional data.

Huang also unveiled new gaming chips that use Nvidia's 'Blackwell' AI technology, which has helped propel its sales in data centers.

As Nvidia rises significantly and hits record highs, investors may employ various options strategies to capitalize on the momentum, hedge their positions, or speculate on future price movements. Here are some common options strategies:

Bullish (Expecting Further Rise)

1. Bull Call Spread

What: Buy a call and sell another call with a higher strike price.
Why: Reduces cost compared to a long call but caps potential gains.
Example: Buy a $150 call and sell a $160 call.

$NVDA Vertical 250131 150.0C/160.0C$

2. Cash-Secured Put:

What: Sell puts at a lower strike price to potentially buy the stock at a discount if the price falls.
Why: Profits from high volatility and generates premium income.
Example: Sell a $145 put, obligating you to buy NVDA at $145 if assigned.

$NVDA 20250131 145.0 PUT$

Bearish or Neutral (Expecting Pullback or Consolidation)

3. Covered Call

What: Sell calls against existing shares of NVDA.
Why: Generates income from premiums and offers partial downside protection.
Example: Sell a $160 call on 100 shares owned.

$NVDA 20250131 160.0 CALL$

4. Bear Put Spread:

What: Buy a put and sell a lower-strike put.
Why: Profits from a decline in the stock while limiting risk.
Example: Buy a $150 put and sell a $145 put.

$NVDA Vertical 250131 145.0P/150.0P$

Hedging (Protecting Profits)

5. Collar:

What: Combine a protective put and a covered call.
Why: Locks in a range for potential gains/losses.
Example: Buy a $145 put and sell a $155 call.

$NVDA Custom 250131 145.0P/155.0C$

Risk Warning: These strategies are intended for reference only and do not constitute investment advice. It's important to assess your financial situation and possibly consult with a financial advisor before implementing any trading strategies.

$(NVDA)$

Sell the Fact? Is NVIDIA a Buy Under $140?

NVIDIA CEO Jensen Huang delivers a keynote speech at CES 2025. NVIDIA reached a new all time high of $153 and then pullback under $140. ----------- Are you bullish on the new products? Is the pullback a good dip buying opportunity? At what price would you add Nvidia?

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