In the unpredictable market we’re currently trading, it’s important to keep a close eye on overextended stocks and emerging trends.
And when you’re trading a small account, I think options are the best way to build up your starting capital.
After all, this strategy is my bread and butter. I’ve made a large part of my $4 million fortune by shorting overcrowded charts and scalping quick, in-and-out call plays.
Today, we’ll examine two of my recent trades that led me to some juicy gains … A put trade on a giant in the semiconductor space and a call play involving the hottest sector in the market right now.
I alerted both of these trades last week. Congrats to anyone who banked with me! That said…
WARNING: You should never simply chase my trade alerts! Always do your own due diligence before entering any trades!
Now, I’ll break down what caused me to make these trades and explain how I navigated the charts once I was in them.
Keep reading and I’ll show you…
Puts on Nvidia Corporation (NASDAQ: NVDA)
First, let’s break down my recent NVDA trade…
I’ve been keeping a close eye on this chart for several weeks now, and I know many Evolvers have as well…
Why? Because NVDA is the most overextended stock in the entire market, up 135%+ in the past six months alone!
And when a stock as popular as NVDA gets as toppy as it currently is, I’m on high alert for put-trading opportunities.
After all, I’ve made an entire career out of shorting the tops on overextended momentum stocks … a category that NVDA fits like a glove.
Recently, NVDA’s been surging with very little consolidation. At this point, it’s just a waiting game to see when it has some fairly big red days that send it back toward $240 support.
Want to be alerted to hot trade ideas before anywhere else?
Check out the alert for CXAI on April 13th:
This is a tool you’ll want in your trading toolbox.
That said, it’s psychologically difficult to hold long-term puts for many weeks, which is why I like scalping smaller pullbacks along the way.
And that’s exactly what I did on April 4…
That morning, I bought 10 NVDA 4/14/2023 $247 Puts for $7.20, then added more contracts toward the end of the day as the chart was looking extremely weak into the close…
Plus, the timing of this weakness lined up perfectly with NVDA’s major $277 resistance level.
Coincidence? I think not…
These two indicators coinciding is what caused me to pull the trigger, and I’m glad I trusted my conviction…
I sold my puts right at the open the following day, April 5, for $10.82 — a gain of 50% in less than 24 hours!
NVDA chart courtesy of StocksToTrade.com
This was a perfectly standard, bread-and-butter puts trade for me…
Bottom line: When an overextended chart meets a major resistance level … that’s usually a prime time to consider trading puts.
Spoiler alert: I bought another batch of NVDA $260 puts last Friday, April 14 (but more on that later in the week)…
Calls on Coinbase Global Inc. (NASDAQ: COIN)
Unless you’ve been living under a rock, you’ve probably noticed that the cryptocurrency sector has been absolutely blasting off…
Last week, Bitcoin (BTC) hit $30,000 for the first time in ten months…
So, why are coins going parabolic? It all comes back to the regional banking crisis…
As traders lose faith in major financial institutions, alternatives to the traditional banking system begin to look like more attractive investments.
Aside from cryptocurrencies, precious metals — another well-known “flight to safety” from banks (and the U.S. dollar) — have been soaring as well…
For example, the iShares Silver Trust (NYSEARCA: SLV) is up 17% in the past month and 36% in the past six months … an enormous move for the generally slow-moving commodity.
When I saw all of these indicators together, I knew I wanted to buy calls on a popular crypto stock. But which one?
I’ve traded all of the following crypto stocks in the past:
- Coinbase Global Inc. (NASDAQ: COIN)
- Marathon Digital Holdings Inc. (NASDAQ: MARA)
- Riot Blockchain Inc. (NASDAQ: RIOT)
- ProShares Bitcoin Strategy ETF (NYSEARCA: BITO)
By the beginning of last week, all of these stocks had started running … except COIN.
COIN had some decent potential upside from the $64 area given how much it crashed earlier last month (when the SEC warned the company it was potentially violating U.S. securities laws).
With that in mind, last Monday, April 10, I bought 30 COIN 4/14/2023 $65 Calls for $2.52.
And yet again, I sold my contracts right at the open the following day for $4.75 — an overnight gain of 88%!
COIN chart courtesy of StocksToTrade.com
I think I traded this setup pretty well, even though I only captured about 50% of the total move. (COIN ended up ramping up to $72 after I sold my calls at $68.)
That said, seeing COIN fall back to the low-$70s toward the end of last week was a good reminder of how important it is to take profits at key resistance zones (or even slightly below, in this case).
Final Thoughts
Again, mazel tov to any Evolvers who profited on these solid trades with me!
The market is starting to present a variety of interesting setups. Keep your eyes peeled.
There will be more intriguing trades to come soon. Stay tuned!
