Profit from Nvidia's Market Trends

Published on August 7, 2024, recent market volatility has led to a significant decline in growth stocks, presenting investors with compelling valuation opportunities. Notably, some of the best-performing stocks are now trading at prices that are over 35% lower than their peak values. This sell-off appears to be reaching a point of exhaustion, as lower price levels are no longer supported by declining momentum, indicating a potential trend reversal. Among the stocks affected, NVIDIA (NVDA) stands out, trading at a forward earnings multiple of 41 times, which is 48% higher than its industry average. However, NVDA is projected to grow its earnings per share (EPS) and revenues at more than double the rate of its competitors. This recent contraction in its valuation offers a rare chance for investors to acquire NVDA at a more attractive price. Investors can capitalize on elevated options premiums, particularly for NVDA, which are currently in the 99th percentile. By selling put options, traders can potentially purchase NVDA at an effective price of $92.95 if the stock is below $100 at expiration. This would equate to a valuation of 36 times forward earnings, representing a 35% discount from just over a month ago. If NVDA remains above $100 at expiration, the yield on this cash trade could exceed 7.5% within 30 days. This information is intended for informational purposes only and does not constitute financial or investment advice.