Nvidia shares continue to rise, exceeding the former record closing of $173.00 from 17 July, now trading near $173.10. Earlier this week, the shares experienced a decline, dropping from $173.17 to $164.58, before buyers intervened near moving averages, leading to a rebound.
The hourly chart shows a pattern where dips consistently find support at the 50-hour moving average or, if breached, the 100-hour moving average. These averages provide a guide for traders, maintaining a bullish outlook as long as prices stay above them.
For traders, recognising when bias shifts is essential. The bullish trend persists while prices are above these moving averages; a fall below would suggest a change to a bearish short-term outlook. The analysis stresses the importance of understanding risk over chasing potential rewards, with a focus on when to reconsider positions if support levels falter.
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Based on the continued upward trend, we see an opportunity to use derivatives to manage risk while participating in the gains. With the stock having surged over 150% year-to-date, the key is to use the moving averages as a guide for trade structure. This allows us to stay in the trend while having a clear signal for when to get out.
Following the established pattern of dips finding support, we believe selling cash-secured puts or put credit spreads is a sound approach. By setting the short strike price near the 50-hour or 100-hour moving average, we can collect premium while defining our risk precisely. This strategy benefits from the price bouncing, moving sideways, or even dropping slightly, as long as it stays above our chosen level.
We must pay close attention to the upcoming earnings report expected in late August, which will cause a spike in implied volatility. This makes buying options more expensive, but it creates a favorable environment for selling premium, as volatility will collapse immediately after the announcement. Historically, the stock’s post-earnings move is often less than what options markets price in, rewarding those who sold the elevated premium.
The analysis correctly notes that a break below the moving averages would flip the bias to the downside. For derivative traders, this is a clear signal to close bullish positions like long calls or short puts. This could also be the trigger to initiate bearish positions, such as buying puts, to capitalize on a potential correction.
This bullish sentiment is reinforced by major institutional conviction, with firms like Rosenblatt Securities recently raising price targets to $200 on a post-split basis. This underlying confidence supports staying with the trend as long as the price remains above the technical support levels discussed. As long as we are not “risked out,” there is reason to maintain a bullish derivative strategy.
