tech
Nvidia is in a deep correction and super cheap. How to trade a bounce on it with options
Jeff Kilburg breaks down a risk reversal in the AI giant.
TL;DR
- Nvidia's market cap has fallen from $5 trillion to $4 trillion, approximately 20% off its peak.
- The stock is trading at its lowest forward P/E ratio in five years (20), presenting a potential value opportunity.
- Chip demand and data center buildouts are expected to remain strong themes through 2026 and beyond.
- A projected resolution with Iran and the reopening of the Strait of Hormuz could trigger a 3%-5% broad market rally.
- A risk reversal options trade was executed: selling NVDA 4/24/26 $160 put for $4.00 and buying NVDA 4/24/26 $175 call for $5.25, costing $1.25.
- This trade was initiated when NVDA was trading just under $170.