Most readers know that Nvidia (NVDA) did a 4:1 split on July 19th. I was in long option positions before the split, some I exited before the split and some I’m still holding.
If you go to my Active Positions page and scroll to the bottom you will see all my positions. Under “LEAPS” you will see positions I’m still holding. Under “Closed Nvidia Split Plays” you will see positions I exited. Today I exited a 2 contract position.
On 7/15/21, the week before the split, I bought 1 contract of the NVDA 10/15/21 $760 call for a premium of $60. After the 4:1 split this position became 4 contracts of the NVDA 10/15/21 $190 Calls. My cost in no longer $60 per contract, it is now $15 per contract.
Today I sold 2 of the 4 contracts. Here’s the trade.
Post 4:1 Split “Sell to Close”
7/15/21 – Buy to Open 1 NVDA 10/15/21 $760.00 C @ $60.00
8/2/21 – Sell to Close 2 NVDA 10/15/21 $190.00 C @ $19.00
Profit +$800
The 1 contract of 7/15 became 4 contracts and I sold 2 of them. After the split my cost is $15 per contract. I sold 2 of them for $19 for a $4 profit. The $4 profit for the 2 contracts is a total profit of $800. If you have any questions on this send me an email.
I still own a bunch of positions, and I think NVDA is going higher, so why did I sell these contracts?
You know I don’t like buying options. If I do, I like to buy long term options, LEAPS. With my “split strategy” I sometimes buy options that are not LEAPS. The options I sold today expired on 10/15, that’s 75 days away. 75 days is more than 2 months away but this is too short term for me. When I have a profit I like to lock it in. However, I feel NVDA is going higher so I only sold 2 of the 4 contracts. I hope to be out of all my Oct options within a week or 2. I do not want to be part of a pullback and have Time Decay eat away at my profits.
I have 2 contracts left to this position and I have another 4 contracts of the 10/15/21 $205 Calls. Like I said, I hope to be out of all these Calls within 2 weeks.
The other Calls I own expired on 1/21/22 and 1/20/23. With these I have more time so I can hold a little longer.
At the bottom of my Active Trade page you can see all the positions I exited involving this split. So far I profited $8600.
Any questions on my strategy send me an email.
Successful trading,
Steve
The Options Coach