Hey guys, welcome to another edition of the Magnelibra Markets. Today’s episode #58 is entitled “All Eyes On Nvidia”
Quick Disclaimer: The following podcast is for educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and may not be appropriate for all listeners.
As the title suggests all eyes will be on the Nvidia earnings after the close today. As far as analyst expectations they are looking for 74c a share on $33Bn in revenue +85% YoY and +82% YoY respectively. Nvidia is always expected to post a beat and the options markets are all in on the upside as call interest in the 11/22 expiry is massive near 700,000 contracts. Let’s just say there will be a massive Gamma squeeze higher should this stock trade above $150. Just to put this into perspective, at $170 a share Nvidia will have a market cap of nearly $4.2 Trillion dollars! That is literally insane and priced for future perfection, well that is an understatement.
Anyway let’s look at the options to see what the at the money (ATM) straddles are pricing in right now. We will use the $145 strikes and total cost is $12.67 for an expected BreakEven (B/E) of about 8.7%. As we stated open interest is heavily favored on the call side as there are 740k or so from $145 to $165 and on the put side there is decent volume between $140 down to $130 with some decent size on the $120 put which is trading around $0.47.
So if you are bullish you can put on the $155/$165 Call spread for about $1.70 so risk/reward of 5.9x or you can put on the $135/$125 Put spread for $1.65 or 6.0x. A little bit of something for everyone there.
Here is the current chart of Nvidia, its up 60% since August 19th lows, $133 will be our longer term high line in the sand, meaning bulls want to stay above this area on the weekly charts, with $123 initial VWMA support:
Target came out earlier today with disappointing comparable sales and gross margin numbers. Target CEO noted lower discretionary demand and cost pressures has caused them to revise guidance back down from last quarter. Target is down some -55% from its ATHs back in late 2021 and its down -21.75% on the day. Target is trading $122.20 nearly -$30 on the day. $91 seems like the logical support here now and the likely major target:
As far as the futures markets, the Nasdaq is right in the middle of our Support and Resistance areas:
I just wanted to throw out here the picture of the December Dax Futures, we know all the capital is on the US markets, but this thing seems like its at the beginning stages of a full breakdown. The weekly chart looks disastrous and the 21p VWMA was the only thing that saved it so far, so guys keep an eye out on this thing:
The same can be said for the Dec. Nikkei, this one is even closer to our VWMA full cross on the weekly, which would indeed start to flip some mechanical systematics to implementing sell side programs:
December Gold is +3.1% on the week off the 21 VWMA but $2678 will be our first resistance point and expect some sellers to step in should we trade there. We are close to rolling this to the Feb. Future where the spread is about a -$25 so the equivalent level for $2678 in December futures is $2703 in the Feb 2025 Contract :
Bitcoin continues to benefit from all the Wall Street retail inflow. Also MicroStrategy issued a massive convertible note security at 0% mind you, some $2.6 Billion borrowed with the convertible senior notes due in 2029 with an initial conversion price of $672.40 per share. Currently MicroStrategy is +370% since its August lows now trading $483 +42% this week alone!
As of 11/11/2024 MicroStrategy owned 331,200 BTC with a total value at $93k per BTC of $30.8 Billion dollars:
MicroStrategy continues its swapping of US dollars into Bitcoin and its total debt after the recent convertible security issuance should be around $7Bn. Their average Bitcoin price is around $38000 so their breakeven aligns nicely with our longer term support area now. What is interesting is the equity has outperformed Bitcoin by about 4 to 1 so if Bitcoin doubles in price, will we continue to see that kind of stock outperformance? Assuming within the 5 years it does than MSTR 0.00%↑ could trade somewhere up at $2000 a share! This is the reason they can borrow at Zero%! Honestly it is truly amazing and a massive asymmetrical call option for these investors and an even more amazing opportunity for a company to obtain this kind of confidence!
Ok well we leave you with yesterdays MEGA8s and settlements. For now we have the basket hedge on it is the QQQ 506 Call for this Friday. Hope you guys are understanding the concepts that we are providing and we hope you continue to improve and refine your game, Nvidia and Tesla the big winners yesterday:
As far as the settlements page, US bonds showing some life and the other markets pretty lack luster all around not much movement:
Alright that does it, let’s see how earnings goes, we believe this is a very big data print for many market participants and with everyone bulled up, let’s just say all the bets are one sided here and generally money doesn’t come that easy! Ok guys till next time, cheers!
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of or from Magnelibra Capital Advisors. Magnelibra the Commodity Trading Advisory and its proprietary long/short commodities, futures and options managed accounts may hold long and or short positions in the various futures and markets that Magnelibra covers. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed. If you are interested in opening an individual managed futures and options account to compliment your overall investment portfolio you can visit our website at https://magnelibra.com for more information. We are implementing a new trading program launching at the start of the new year, which will include access to Bitcoin futures and options. Please contact or make inquires directly to our introducing broker Capital Trading Group, please contact Nell Sloane at nsloane@capitaltradinggroup.com
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