Traders returned from the long holiday weekend with an insatiable appetite for big cap tech stocks.
We’re talking Facebook Inc (NASDAQ:FB) Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX) and Alphabet Inc (NASDAQ:GOOGL,NASDAQ:GOOG). The so-called FANG gang was on fire Tuesday.
And the strength wasn’t isolated to the big boys. The semiconductor space has been in bull mode for months now. And lucky for you, Nvidia Corporation (NASDAQ:NVDA) is boasting one heck of a breakout setup.
NVDA stock is traveling a trajectory steep enough to make even the hottest stocks jealous. Since its ascent began in earnest last fall, Nvidia is up a ridiculous 200%.
Its price chart belongs in a tech analysis textbook illustrating the bedrock principle that a trend in motion stays in motion. Every pause has refreshed, every breakout soared. Momentum has increased and then increased some more.
Now, with NVDA stock having already reached max velocity, the potential for further momentum bursts is nil. But who cares?
NVDA Stock Chart
Even if it maintains it current rate of ascent, profits aplenty will be showered on shareholders. Fortunately for Nvidia spectators, the stock has taken a well-deserved breather over the past month. The consolidation has allowed the white-hot semiconductor stock to digest its recent gain while building a base for its next ascent.
A breach above the $63.60 resistance level is all that’s needed to trigger us into the trade.
The NVDA Stock Trade
With the post-earnings volatility crush having done its dirty work, option contracts are now being offered up on the cheap. Those looking to travel the simple path could snatch-up NVDA call options.
Buy the Oct $60 calls for $4.60. The risk is capped at the initial $4.60 and will be forfeited if NVDA stock sits below $60 at expiration. To minimize the loss, you could exit if Nvidia takes out the $60.50 support level.
If you find the $4.60 price tag a turnoff, consider buying the Oct $65/$70 bull call spread instead. You can enter for a mere $1.03 and still potentially score $3.97 if NVDA ends up rising above $70 by expiration.
At the time of this writing Tyler Craig had no positions in any of the aforementioned securities.
