Nvidia Earnings Are Due Next Week. Here's One Possible Options Play.

Core Insights - Nvidia is set to report earnings on November 19, with the options market anticipating an 8% price movement in either direction [1] - The stock has historically remained above the lower end of the expected range during earnings announcements [1] Options Trading Strategy - A bull put spread can be structured based on the expectation that Nvidia stock will stay within the expected range and respond positively to the earnings report [2] - The proposed trade involves selling the November 19, 177.50-strike put and buying the 175 put, creating a bull put spread [3] Trade Details - The bull put spread recently traded for approximately $0.45 per share, yielding $45 in option premium for a 100-share contract, with a maximum risk of $205 [4] - This represents a potential return on risk of 21.95% if Nvidia stock remains above 177.50 by expiration [4] - The break-even point for this trade is calculated at 177.05, factoring in the option premium [5] Market Context - Nvidia stock experienced a decline, trading near $186, prompting consideration of alternative strike prices for the trade [5] - The potential for a 21% return in a short timeframe is appealing, but the risk of losing the entire investment is significant, indicating this trade is suited for high-risk tolerance investors [6] Stock Ratings - Nvidia stock holds a Composite Rating of 99, an Earnings Per Share Rating of 99, and a Relative Strength Rating of 86, ranking first in its group according to Investor's Business Daily [7]