Any one brave enough to short NVDA?
- Thread starter PPC
- Start date
Shorting a hot stock at ATHs in a hot market with strong fundamental tailwinds & earnings growth is a fool's errand. The R:R is largely illusory because even if the advance flattens out, the stock is far more likely to go sideways or grind higher for a lengthy period of time rather than shortly crash by 50%.
pump and dump for the big money are called long short squeeze.
Leave shorting to the few very few savvy and knowledge people who can successfully get away with it. Should you win on this position, your bad habit will simply be reinforced.
Suggestion: keep putting money in the market via your tax efficient retirement account, year after year, decade after decade.
Only the reply from @ETJ and from @Overnight made some sense to me.
Most other posters seemed to miss that I wrote “I’m stalking NVDA, building up a large short position (option spread). The reward to risk is phenomenal with limited risk”.
(the 'option spread' and 'with limited risk' is the key)
I’m not expecting NVDA to drop like a rock (unlike FX, stocks rarely have V-reversals).
What I see is an overhead level which the big intuitions are watching as well, and they have a tendency to unload part of their profitable positions at such levels to rebalance their portfolios, and in such event the stock usually at least consolidates before it goes higher, or it can sell-off. That’s all there is to it.
Meantime, I’m scaling in (building an option spread position) as NVDA meanders under the key overhead resistance, and so my biggest risk is actually drop in IV, and not so much price risk, plus Theta gives me some cushion if I’m wrong.
If NVDA goes up through” my action” point (which is nearby, hence very limited risk), then I’ll adjust my time-spread structure into a diagonal time-spread, plus if needed I do gamma scalp around my longer-term-option spreads positions so I can most often (not always) get out for BE or with a profit even when I’m totally wrong on direction and/or timing.
I take into consideration not just the underlaying, but also the current IV level, current skew and term structure, expected price move (magnitude, velocity and timing precision) which makes my trade a very low risk and high reward.
Instead of ratio spreads, I usually prefer BWBs, but the current NVDA's IV is too low for a longer-term fly.
Tony Saliba also used to sprinkle around spreads (usually flys with kickers), and I do the same although this time because of the Vega risk I went for directional time-spread (with a kicker).
Most other posters seemed to miss that I wrote “I’m stalking NVDA, building up a large short position (option spread). The reward to risk is phenomenal with limited risk”.
(the 'option spread' and 'with limited risk' is the key)
I’m not expecting NVDA to drop like a rock (unlike FX, stocks rarely have V-reversals).
What I see is an overhead level which the big intuitions are watching as well, and they have a tendency to unload part of their profitable positions at such levels to rebalance their portfolios, and in such event the stock usually at least consolidates before it goes higher, or it can sell-off. That’s all there is to it.
Meantime, I’m scaling in (building an option spread position) as NVDA meanders under the key overhead resistance, and so my biggest risk is actually drop in IV, and not so much price risk, plus Theta gives me some cushion if I’m wrong.
If NVDA goes up through” my action” point (which is nearby, hence very limited risk), then I’ll adjust my time-spread structure into a diagonal time-spread, plus if needed I do gamma scalp around my longer-term-option spreads positions so I can most often (not always) get out for BE or with a profit even when I’m totally wrong on direction and/or timing.
I take into consideration not just the underlaying, but also the current IV level, current skew and term structure, expected price move (magnitude, velocity and timing precision) which makes my trade a very low risk and high reward.
Instead of ratio spreads, I usually prefer BWBs, but the current NVDA's IV is too low for a longer-term fly.
Tony Saliba also used to sprinkle around spreads (usually flys with kickers), and I do the same although this time because of the Vega risk I went for directional time-spread (with a kicker).
