Nvidia breaks through 4 trillion! How to use options to chase the rise?
On Wednesday, Nvidia made history, becoming the first company in history with an intraday market value of more than $4 trillion.
During the early trading session of the U.S. stock market on Wednesday, July 9, Eastern Time, Nvidia's stock price once rose to $164.42, a record intraday high. The intraday increase expanded to 2.8%, and the market value subsequently exceeded the milestone of $4 trillion. Nvidia currently accounts for 7.5% of the S&P 500, and its influence is close to the highest level on record.
Moreover,Recent mega-deals suggest that demand for AI computing power continues.
Since the beginning of this year, Nvidia's stock price has risen by more than 20%, and if counted from the beginning of 2023, the increase will exceed 1,000%. Nvidia's market value only reached US $1 trillion for the first time in June 2023. Since then, its market value has tripled in about a year, faster than Apple and Microsoft, which have taken turns to occupy the first place in market value this year, becoming the third American company with a market value of more than US $3 trillion.
LSEG data shows that Nvidia's market capitalization has exceeded the combined market capitalization of the Canadian and Mexican stock markets, and also exceeded the combined market capitalization of all companies listed in the UK.
For investors who want to chase Nvidia after new highs, they can consider using sell put options to go long Nvidia.
Options Strategy: Go Long Nvidia with Put Options
The current Nvidia price is $163, and we can sell itExpires August 08, 2025, exercise price 160, premium $509Put Option (Put Option) to go long Nvidia.
This strategy can not only profit when Nvidia rises, but even if Nvidia goes sideways or falls slightly, it can still rely on premium to earn earnings.
Operational logic
Selling a put option is equivalent to a commitment: if Nvidia's stock price falls below $160 at expiration, you are willing to buy 100 shares of Nvidia at $160. As compensation, you receive $509 premium in advance.
Maximum benefit
If Nvidia's stock price is higher than $160 at expiration, the option will not be exercised, and you do not need to buy the stock, and you can keep all premium of $509. This will be the strategy'sMaximum benefit。
Break-even point
yourActual buy-in costIs the exercise price of $160 minus $5.09 per premium, which is$154.91/Share。 Therefore,The breakeven point is $154.91, as long as the stock price is higher than that price at expiration, you are profitable overall.
Maximum loss
If Nvidia's stock price is 0 at expiration (extreme case), you will be bought 100 shares at $160/share, with a total payout of $16,000. And you only get $509 premium, and the final loss isUS $15,491。
Strategic Advantages
You can still make profits when the stock price is flat or falls slightly.
Actually buy Nvidia at a lower price: $154.91 instead of the current market price of $163.
It is suitable for investors who are optimistic about Nvidia for a long time and want to "buy low".
Strategic risk
If the stock price falls sharply, it may be necessary to buy Nvidia at a price higher than the market price, resulting in a large loss.
It is a strategy of "limited income, unlimited risk", and the proportion of positions needs to be strictly controlled.
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