Top 10 Influencers in 2024NVIDIA's earnings report is coming, how to play options? (Popular Science)
Jumping on the trend, I don't recommend gambling on options before earnings unless you're very confident and have sufficient cash flow (it's okay if you lose).
As for this earnings report, it's hard to understand. Details here: NVIDIA earnings tomorrow, bullish or bearish?
Let's talk about options.
I've been playing with derivatives for years, starting with leveraged A-shares in 2014, then warrants in 2018, and later trading U.S. stock options.
I've had plenty of experience, both good and bad. Sharing some insights for newcomers.
I believe there's only one way to make big money with options:
Buy long-term, low-priced options.
For example:
On January 17, I recommended an option: NVIDIA January 17, 2025 expiry, strike price 650.
By June, it had surged 10x in just six months.
This isn't to show off but to prove the strategy works:
1. Judge the stock's trend through fundamentals—long-term trends are clearer (NVIDIA is in a bull market with explosive earnings growth, making it even more certain).
2. Long-term options ensure you won't get shaken out. Otherwise, how could you avoid being shaken out during April's big correction?
Conversely,
The shorter the term, the harder it is to predict.
The shorter the term, the lower the chance you'll hold, as short-term options are more volatile, and few are immune to money's psychological impact.
(Of course, I didn't hold either... still lacking discipline.)
The movie "The Big Short" has a real-life case that's a classic—highly recommended.
Two guys (Jamie and Charlie) turned $110K into $30M by trading options.
They bottom-fished mispriced stock options with 2-3 year holding periods. When the market rebounded, they made 10x, 20x, and after a few rounds, $110K became $30M.
First trade:
This company: COF$Capital One Financial(COF.US)
Plummeted in 2002. They bought the dip in options, held for 2 years, and made 20x!
Second trade:
The third trade took them from $30M to $130M during the financial crisis—shorting real estate bonds.
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