ENOUGH IS ENOUGH NVIDIA!
I’ll be honest with everyone and admit I could not resist selling my remaining JUNE 100 CALL this afternoon. I cashed out with a nice 551% gain. That’s not a typo I assure you. If you think you cannot make more than 4% in the market you’re wrong.
Now, why did I sell? I’m sure that’s the big question right? Keep in mind I still own a JAN 90 CALL that’s up 176% so I’m not out of NVDA completely. I just have enough experience to know when to fold’em. It is very easy to get caught up in the momentum and convince yourself that a stock is just going to keep going up. Sometimes they do and I’m sure this will be one of those times, but the risk, currently, is to the downside.
Therefore, I will continue to hold the JAN 90 CALL and call the shares as soon as I have the funds (early or not I want them). I will wait patiently and hope NVDA pull’s back into the mid to lower 120’s. Maybe it’s wishful thinking, I understand that, but 551% is not something you don’t capture.
MY THOUGHT PROCESS
My thought process was simple: let’s say I called the JUNE 100 tomorrow and held the 100 shares with a cost basis of $100 per share. I would be up $34.00 per share as of right now (roughly) or $3,400.00. My profit on this call was indeed $3,400.00 right now. Today. Without waiting or calling the shares.
To call the shares I would have to come up with $10,000.00 by the third Friday in June (expiration day for the option). I have the money, but don’t want to dip into that pot just yet. To make another $3,400.00 NVDA would have to move on to $165.00 per share which happens to be the new price target Goldman Sach’s issued this morning.
Sure, I believe without a doubt, that NVDA will be $165.00 per share within the next twelve months. Will it get there by June? Probably not (who knows). Is it more likely we have a market down day and a minor selloff in NVDA? I, again, believe yes is the answer. It probably won’t be a large selloff and it might be so fast you could miss it if you’re eating lunch, but it could still happen and when it does I will be ready to double-down on the JAN 90 CALL!
PROPER PORTFOLIO ALLOCATION
Also, keep in mind, I owned 300 shares (or three) worth of options on NVDA which would have cost $29,000.00 to call. My portfolio currently doesn’t equal that much. I planned on transferring funds into the portfolio to call the shares, but the balance at that point would be $60,000.00 and HALF would have been NVDA.
I do not like having any one holding totaling more than 5% of my portfolio. Currently, I am overweight several including Intel [stock_quote symbol=intc] and GE [stock_quote symbol=ge]. The thought of half being in NVDA was just a little too much for me to swallow for the year. This was also a deciding factor in my decision to cash out of the JUNE call’s completely.
I am 100% confident I will regret selling the two JUNE call’s…I am well aware of this fact.