In an interview on Bloomberg’s Money Makers, Anshul Agarwal, equity derivatives strategist at Bay Crest Partners, discussed how to play NVIDIA Corporation (NASDAQ:NVDA)’s options ahead of its earnings report, and about stock market volatility.
NVIDIA Corporation (NASDAQ:NVDA) is expected to release its earnings report on August 7, after the bell. Although Agarwal remains “somewhat bearish” on NVIDIA Corporation (NASDAQ:NVDA), he stated that NVIDIA Corporation (NASDAQ:NVDA) has been underperforming in the past few months, following a high-performance streak in January this year compared to their competitors. He said this does not bode well for NVIDIA Corporation (NASDAQ:NVDA).
He also said that NVIDIA Corporation (NASDAQ:NVDA) has decent cash balance, but that his trade would be to sell the call spreads and the weekly call spreads.
“[…] My trade is really to sell the call spreads and the weekly call spreads, which are implying roughly seven and a half percent move and I think it is quite fair and I would like to sell slightly in the money call spread for one week seventeen, eighteen and a half call spreads for around 70 cents and it is a break-even type, but I like it, given the way the stock is setting up,” he said.
Additionally, Agarwal spoke about the September volatility saying that some near-term August volatility, which was a result of further moves, was also being sold. He added that the volatility has been quite elevated. He predicted that going forward, the Federal Open Market Committee is going to be the real catalyst pushing volatility higher. He also added, “The options market is very active in the longer-term option, the January 2016. The players are really capitalizing on the increased dividends.”