Revisiting a Red Hot Virtual Reality Play and Locking in 306.99% and 148.19% Option Gains

This week’s Alpha Algorithm revisits NVIDIA Corporation (NVDA), the emerging tech giant at the forefront of the virtual reality boom.

Recall that you’ve already booked double-digit-percentage gains in this stock on three different occasions over the past 12 months.

Founded in 1993 and headquartered in Santa Clara, California, NVIDIA Corporation (NVDA) is a visual computing company. It offers processors for PC gaming, design professionals working in computer-aided design, video editing, special effects, deep learning, accelerated computing and general purpose computing. NVIDIA sells its products primarily to original equipment manufacturers, original design manufacturers, system builders, motherboard manufacturers, add-in board manufacturers and retailers/distributors.

NVIDIA Corporation vs. the S&P 500 year to date.

12 Top Investment Strategies Betting on NVDA

1. Large-Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

2. Large-Cap Alpha Growth

NVIDIA has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

3. Large-Cap Alpha Core

The stock is one of a tiered equal-weighted index of large-cap stocks selected from the S&P 500 expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks according to their recent performance.

4. Pure Growth

The company is part of a strategy that selects companies from the S&P 500 Index, based on three growth factors: current internal growth rate, historical earnings per share (EPS) growth and historical sales/share growth.

5. Momentum Factor

The stock is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

6. Momentum Model

The stock is among the top approximately 100 U.S.-listed companies to demonstrate powerful strength characteristics relative to the 3,000 largest U.S.-listed companies.

7. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

8. Exponential Technologies

The stock is part of a strategy that invests in nine different fields deemed to be vast growth “exponential technologies”: big data and analytics, nanotechnology, medicine, networks, energy and environmental systems, robotics, 3-D printing, bioinformatics and financial services.

9. High-Quality Stock

The stock exhibits positive fundamentals, including high return on equity, stable year-over-year earnings growth and low financial leverage.

10. IBD Top Fifty

NVIDIA is a Top 50 stock based on Investor’s Business Daily’s proprietary trading formula to identify 50 stocks that meet one of seven different catalysts. The “CAN SLIM” strategy identifies companies with either fundamental (improving earnings or new product) or technical (upward stock move on strong volume) catalysts.

11. Goldman Sachs’ Active Beta

The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

12. Value Tilt

Selected using a multi-factor modeling approach, the company is a value stock designed to enhance portfolio risk/return characteristics.

Recommendation

Buy NVIDIA Corp (NVDA) at market today. Place your initial stop at $184.00.

If you want to play the options, buy the NVDA January $205 calls (NVDA180119C00205000), which last traded at $17.00 and expire on Jan. 19.

Portfolio Update

Option Sales

With several of your positions making big moves up this past week, it’s time to book some big options gains.

Sell all of your remaining Intel (INTC) January $39 calls (INTC180119C00039000), which last traded at $7.57, for a quick 306.99% gain.

Sell all of your remaining Micron Technology (MU) January $35 calls (MU180119C00035000), which last traded at $10.30, for a 148.19% gain.

New Options Recommendation

With Facebook (FB) breaking out of a long-term trading range, this is good time to place an options bet.

So buy the Facebook (FB) January $180 calls (FB180119C00180000), which last traded at $10.86 and expire on Jan. 19.

Raising Stops

Raise your stop in Intel Corporation (INTC) to $45.50 to lock in at least a 15% gain in the stock.

Raise your stop in Micron Technology (MU) to $43.15 to lock in at least a 20% gain in the stock.

Finally, raise your stop in PayPal Holdings Inc. (PYPL) to $67.80 to lock in a 25% gain in the stock.

Sincerely,

Nicholas A. Vardy