Monday, February 11, 2019

Nvidia very short term call for income

Nvidia, symbol NVDA is not exactly a dividend machine but it does pay a dividend.  Yet, in this trade today, the dividend is irrelevant as the call expiration is 4 days.  Nvidia's next expected ex-dividend date is later in February.  The point of this call is simply quick income.

I don't really want to own NVDA as a long term holding.  I am hoping to make a quick 2 percent of income in 4 days and bag a small capital gain should NVDA be called away.  If it is not called away I will sell it right away provided it is at or above my cost basis less the income from the call.  The adjusted cost basis in this case would be $146.09 less the income from the premium of $3.00 or $143.09. 

If it is above my cost basis, I will probably continue looking for short term calls until NVDA is called away.   I have done this before with NVDA.  This is not a conservative investor's trade.  It is controlled risk to boost income. 

Nvidia's Fundamentals:

NVDA has good enough fundamentals that I am not too worried about it going belly up.  However, it is extremely volatile and could sink to the 52 week low or go lower on some catalyst that I do not know about.

Short Term Call:

Call prices vary all day long.  You may not be able to get this trade tomorrow and I could not get this published before the market closed.  Yet, you may be able to do even better.  It all depends on the call buyers.

Pressure is being placed on corporations to not pay out dividends.  We income investors are already suffering from having no safe place to earn income and with dividend payouts pressured, covered calls become even more important.

If you have cash to put work, consider a trade like this.

M* MoneyMadam