Tyler DeWayne Moore : 1. Strategy:
With NVDA currently trading in the $191–$192 zone, the goal is to act as the casino and sell the inflated earnings volatility premium. I would structure this by selling an out-of-the-money put at the $175 strike and buying a further out-of-the-money put at the $170 strike, both expiring this Friday. As long as NVDA doesn't drop more than ~8% by the end of the week, you keep the credit.
2. Levels Monitored:
• Entry: Execute the $175/$170 credit spread on Wednesday afternoon, right before the closing bell, to capture peak pre-earnings IV.
• Exit: If the report is a solid beat and the stock rallies or simply trades sideways, IV crush will decimate the value of those puts by Thursday morning. The target exit is to buy-to-close at 10% to 20% of the initial premium collected, or let it expire worthless. If the stock gaps down, $180 is the first major psychological defense line before the $175 short strike is tested.
3. Risk Management:
Because this is a defined-risk spread, the absolute maximum loss is strictly capped at the $5 width between strikes minus the initial credit received. Position sizing is the ultimate risk manager here—this trade should account for no more than 2% to 3% of total capital. If the stock violently breaches the short strike post-earnings, a mechanical stop-loss is set to close the position if the drawdown hits 50% of the maximum risk.