DailyPlay – Adjusting Trade (NVDA) – December 18, 2024

NVDA Bullish Trade Adjustment

Investment Rationale

We recently rolled the short call leg of our NVDA diagonal position up and out in time, generating a small net credit. With the recent weakness in the stock’s price, we will roll the short option again to capture the gain on the current short position and bring in additional premium by rolling down and out this time around.

We will adjust this position by closing one leg and opening another leg of this Call Diagonal Spread. Below is the current position breakdown with the individual legs listed.

Original Position:

• Long 1 Jan 17, 2025 $124 Call
• Short 1 Dec 13, 2024 $148 Call 
• Cost Basis $16.79 Net Debit

Current Position after the previous Roll/Adjustment:

• Long 1 Jan 17, 2025 $124 Call
• Short 1 Dec 27, 2024 $152.5 Call
• Cost Basis $16.22 Net Debit

Trade Details

Strategy Details

Strategy: Second Adjustment of a bullish Call Diagonal Spread

Direction: Resulting in a new bullish Call Diagonal Spread

Details: Buy to Close 1 Contract Dec 27 $152.50 Call and Sell to Open 1 Contract Jan 10 $144 Call @ a $2.00 net Credit, or $200 per 1×1 roll ($2.00 x 100). The total net Credit received for rolling this one call contract is $200. This roll establishes a new Call Diagonal position in NVDA.

Total Risk: This trade has a max risk of $1,422 (1 Contract x $1,422) based on a hypothetical $100,000 portfolio normally risking 2%. We suggest using 2% of your portfolio value and divide it by $1,422 to select the # contracts for your portfolio.

Current Position:

• Long 1 Jan 17, 2025   124 Call
• Short 1 Dec 27, 2024 152.5 Call

Resulting Position after Roll/Adjustment:

• Long 1 Jan 17, 2025  $124 Call
• Short 1 Jan 10, 2025 $144 Call
• Cost Basis $14.22 Net Debit ($16.22 Debit brought forward – $2.00 Credit received)

Adjusting the Trade

Use the following details to Adjust the NVDA trade on your trading platform.

PLEASE NOTE that these prices above are based on Tuesday’s closing prices.

Below is the position following today’s Adjustment Trade: