Monday, April 10, 2023

Covered Call On NVDA Stock


What is a covered call?

A covered call is an options trading strategy where an investor sells a call option on a stock they already own. By selling a call option, the investor agrees to sell their shares at a predetermined price (known as the strike price) within a specific time frame (expiration date). In return for this agreement, the investor receives a premium from the option buyer. This strategy is considered a non-losing strategy because it provides a way to generate income from a stock position without taking on excessive risk. If the stock price does not rise above the strike price before the option expires, the investor keeps the premium and can sell another call option for additional income. If the stock price does rise above the strike price and the investor is called upon to sell their shares, they still make a profit.

Stock selection is a critical aspect of using covered calls as a trading strategy, and the investor should choose stocks that they have confidence in and believe will perform well. Implied volatility is a measure of how much the market expects a stock’s price to fluctuate, and it affects the price of options. When implied volatility is high, options become more expensive, which means you can sell calls at a higher price and collect more premium.

Why NVDA Stock?

AI and GPT-4 will make Nvidia the best AI Company more so than Google and Microsoft. Nvidia, whose powerful graphics processing units are enabling breakthroughs in everything from self-driving cars to medical research. Nvidia’s groundbreaking developments in artificial intelligence, machine learning, and data processing have positioned the company as a game-changer in multiple industries. Not only has Nvidia demonstrated the ability to revolutionize the gaming industry, but their technology is also being implemented in self-driving cars, healthcare, and finance, among others. I’m going to hit on self-driving cars in great detail as the total addressable market opportunity is perhaps one of the biggest that NVDA and GPT-4 will tackle.

With the help of GPT-4, AI, self-driving cars can interpret sensory input and make quick decisions in real-time, potentially reducing accidents and fatalities caused by human error. This speeds up the self-driving revolution and GPT-4 is really helping in this regard. Self-driving cars rely on a wide range of inputs to make decisions, such as video feeds from cameras, radar signals, and lidar data. GPT-4’s ability to understand complex prompts means that it can process and make sense of this data more efficiently and accurately, allowing self-driving cars to make better decisions in real-time. For example, GPT-4 could help self-driving cars understand and respond to complex traffic scenarios that may involve multiple vehicles, pedestrians, and road signs. It could also help self-driving cars to make sense of complex weather conditions, such as snow or heavy rain, which can be difficult for human drivers to navigate. Additionally, GPT-4’s improved performance in solving standardized tests could enable self-driving cars to pass regulatory requirements and safety standards more easily, speeding up the adoption of this technology on a larger scale.

The other big opportunity GPT-4 will change the landscape for is search engines. Current search engines don’t actually use AI so the results you receive after searching something you want is not always accurate or exactly what you need. That’s because you can’t always search for something you don’t know. We don’t know what we don’t know is the common adage. Search engines currently use SEO or search engineer optimizations to get you the best results. But that’s all about to change. GPT-4 will help search engines talk and understand us better. This means that instead of just typing in a few words to find what we’re looking for, we can talk to the search engine like we talk to a friend. It’ll be like having a conversation! With GPT-4, we won’t have to worry about using the right keywords or phrases. We can just ask for what we want in our own words, and the search engine will understand us and give us the information we need.

So whether we’re talking about cars taking us to work in the morning while we get some extra sleep or search engines listening to our questions, AI is clearly going to change our everyday lives like the cell phone did. Despite what many people may think, it is Nvidia that will be at the forefront of this technological revolution rather than Microsoft or Google. One interesting example of the intersection between gaming and AI in the context of GPT-4 is the potential for creating more immersive video game experiences. With GPT-4’s ability to generate human-like language, game developers could create richer and more interactive game worlds. We know how cell phones are basically an extension of us. I predict video games will be transformed into augmented reality and blur the line between humans and robots. Another example is the potential for GPT-4 to revolutionize customer service. By understanding and generating human-like language with unprecedented accuracy, GPT-4 could be used to create virtual assistants that can communicate with customers in natural language, understand their needs, and provide helpful responses. This could improve the customer experience and reduce the need for human customer service representatives. All things Nvidia is surely forming plans around to monetize and scale with.

NVDA Technical Analysis For Covered Call

NVDA Technical Analysis For Covered Call

Because of NVDA stock consistent up-trend a covered call is a good idea.

Why Sell Covered Call On Stock?

A covered call can be a good idea on stocks moving higher because it allows the investor to generate income from the stock while also potentially profiting from its upward price movement. By selling a call option on a stock that is expected to rise in price, the investor can receive premium income upfront, while still owning the stock and benefiting from any price appreciation up to the strike price of the option.

If the stock price rises above the strike price, the option buyer may exercise the option, and the investor will be obligated to sell their shares at the strike price. While this limits the potential gains for the investor, they still make a profit as they received the premium when selling the option. You also get the upside until the strike price is reached.

Can Covered Calls Make You A Millionaire?

The answer is yes! I have built significant wealth with covered calls. I’ve even detailed a video below about making $100 a day with covered calls and how they made me a millionaire.

Covered Call Millionaire
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