Option trade on nvidia

Most widely known for graphics processing and building card for PCs, nvidia's stock (NVDA) has recently been on a tear going from $22-63 in the past 52 weeks. Much of the investor attention has come from their lead in creating solutions that cater to the booming artificial intelligence sector. Graphics processing whether for virtual reality or for automobiles is a core technology to interpret the physical world and process that information into digital decisions that drive devices or hardware.

Today nvidia trades at a P/E ratio of 40 which is a rich valuation among a market that is pulling back sharply over the past 3 trading sessions. We don't like buying the stock here, or buying Calls to gain long exposure with the S&P pulling back. However, we do like selling deep out of the money Puts on this stock so we can either collect premium or enter at a much lower price.

We are selling the November $45 Puts for $0.60 cents, which expire in 66 days. This is a 25% discount to where the stock is trading today, and would be a great entry point if the market continued to decline along with NVDA. Overall we view NVDA as a great long-term hold, but not with an entry point where the stock trades today.