Target This Semiconductor Stock Next Month

Nvidia stock reclaimed a key area on the charts last week

Matthew Timpane

CMT, Senior Market Strategist

Oct 25, 2022 at 8:00 AM

NVDA

The below is an excerpt from this yesterday's episode of Schaeffer's Playbook of the Week, featuring Schaeffer's Senior Market Strategist Matthew Timpane, CFA. Below, Matthew makes a bullish case for NVIDIA Corporation (NASDAQ:NVDA).

There’s plenty of semiconductor stocks I’m not a fan of, but if you want to take a shot on something beaten down, look for the leader, and Nvidia is that. The stock breaking out of a downtrend pushing above its 20-day moving average, and recently found support at the -50% year-over-year level.

NVDA Playbook

The 120-strike is peak put open interest, and we pushed above that level last week, so that could be support. Semiconductors are also about to enter a historically bullish month of November, the most bullish month of the year. Nvidia has positive results 58.3% of the time through expiration.

Puts have been growing in popularity over the last 10 weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 1.03 ranks four percentage points from an annual high.

What's more, Nvidia's stock's Schaeffer's Volatility Scorecard (SVS) ranks at 97 out of 100. This means the equity has exceeded option traders' volatility expectations during the last year.

Join Schaeffer's Playbook of the Week now and tune in every Monday morning at 8:30 a.m. to get ready for the trading week with me. Click here for more information to get started.

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