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It finally happened: After a streak of red-hot quarterly results, Nvidia (NVDA) hit a wall, a classic case of soaring too close to the sun. Wall Street had been spoiled, expecting miracles, and this time, the exceptional earnings weren’t enough to fuel the stock higher. Even though Nvidia posted stellar numbers, NVDA stock fell under the weight of its own success.
The numbers don’t lie: Nvidia’s second-quarter fiscal 2025 earnings were nothing short of remarkable. The company reported record revenue of $30 billion, surging 122% year-over-year and 15% quarter-over-quarter. Analysts had pegged revenue at $28 billion, but Nvidia easily blew past expectations.
On the bottom line, Nvidia delivered adjusted earnings per share (EPS) of 68 cents, compared to last year’s 27 cents—a monster beat over analysts’ expectations of 64 cents. Still, this wasn’t enough for investors who had grown accustomed to Nvidia’s blowout performances. When the market demands miracles, anything less feels like a letdown.
The real star was Nvidia’s data center segment, which includes chips used for artificial intelligence. Revenue here skyrocketed 154% to $26.3 billion, driven by robust AI adoption among cloud computing giants and hyperscale data centers.
Gaming, professional visualization, and OEM segments all saw double-digit growth as well. Still, despite all this, NVDA stock couldn’t escape gravity. Following the earnings release, shares tumbled—becoming a victim of high expectations.
If you’re feeling shaken by NVDA’s drop, now’s the time to get familiar with Barchart’s options screeners.
Why Consider a Bull Put Spread on NVDA?
Many investors new to options think in black-and-white terms—buy calls if you're bullish, buy puts if you're bearish. But there’s a more nuanced approach: multi-leg options strategies like bull put spreads. These allow investors to profit from a range of outcomes, increasing the chances of success.
A bull put spread involves selling a put at a higher strike price and buying a put at a lower strike price. The goal? Profit if the stock stays above the breakeven point, with the upside of defined risk.
Using Barchart’s Bull Put Option Screener, traders can find compelling trades based on their risk appetite. Here’s one that stood out—an opportunity to potentially earn income over a very short time frame.
The Trade Details:
- Expiration Date: Sept. 6, 2024
- Action 1: Buy the $105 put at $1.34
- Action 2: Sell the $111 put at $2.26
Key Points:
- Income: You’ll receive $226 gross ($2.26 x 100 shares).
- Net Income: After buying the $105 put for $134, you pocket $92—your max reward.
- Max Loss: Your potential loss is capped at $508 (the difference between the strike prices minus the net premium, multiplied by 100 shares).
- Breakeven: $110.08.
- Risk-Reward Ratio: 5.52:1—meaning you’re risking $5.52 for every $1 of potential income.
At first glance, that risk-reward ratio might seem steep. But if you believe NVDA won’t drop below $111, this trade offers a solid chance for quick income in just over a week.
Navigating Nvidia: Still the Best AI Play?
Nvidia remains an AI heavyweight, indispensable in the global race for advanced semiconductors. Enterprises and government agencies can’t get enough of its chips. Yet, even Nvidia couldn’t avoid a post-earnings dip, highlighting the lofty expectations the market has for the tech giant.
The company’s earnings surprises have been shrinking. In the latest quarter, the surprise factor was just 6.3%, down from 9.8% in Q1 and significantly lower than prior quarters where Nvidia blew past expectations by double digits. This decline likely contributed to the stock’s fall—it wasn’t that the earnings weren’t great; they just weren’t surprising enough.
That’s why, ahead of Nvidia’s Q2 earnings, I suggested the idea of a bull put spread. It was a calculated hedge, betting that the stock wouldn’t crater while acknowledging the risk of the market feeling underwhelmed. The strategy will work as long as NVDA stays above $115.77—the breakeven for the trade.
Looking at the current market action, with NVDA stock hovering around $120 in premarket trading, another week of sideways movement seems plausible. If that holds, the near-term bull put spread could again be an attractive opportunity.
Why Barchart’s Screeners Are Essential for Options Traders
Barchart’s options screeners allow investors to sift through a wide array of potential trades with ease. The screener provides flexibility, whether you’re looking for shorter-term plays or seeking income-generating opportunities with defined risks. With NVDA experiencing turbulence, options traders have a range of tools to capitalize on the volatility.
Final Thoughts
Nvidia may be a tech juggernaut, but even titans stumble. For investors caught off guard by NVDA’s post-earnings dip, Barchart’s options screeners offer a way to turn the tide in your favor. Whether you’re seeking to hedge your bets or simply looking for income, strategies like the bull put spread present a smart way to navigate the noise while keeping risk in check.
Remember, the market will always have its ups and downs. It’s not always about predicting the next move; it’s about positioning yourself to profit regardless of where the stock goes. With tools like Barchart’s screeners, you’re better equipped to do just that.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
