During President Donald Trump’s Middle East trip in May, Nvidia announced significant investments and partnerships focused on advancing their artificial intelligence infrastructure. I want to use options to produce income on Nvidia as I believe new all-time highs ($153.13 all-time high Jan. 5) are coming for the leading AI chipmaker. During the trip, Nvidia agreed to sell 18,000 of its top AI chips to Humain, an AI company backed by Saudi Arabia’s Public Investment Fund. “I am so delighted to be here to help celebrate the grand opening, the beginning of Humain,” CEO Jensen Huang said. “It is an incredible vision, indeed, that Saudi Arabia should build the AI infrastructure of your nation so that you could participate and help shape the future of this incredibly transformative technology.” Trump also said Friday that the U.S. and United Arab Emirates were working on a deal that would let Abu Dhabi buy Nvidia’s top semiconductors. Nvidia’s historic bounce has allowed the tech giant to unequivocally reclaim the Nasdaq 100’s crown. The move off of the April 7 low (86.62 low print ) was a mind-blowing 55% surge up to Thursday’s close of $134.83. Skeptics would say that’s too much, too fast. But, this stock historically has incurred outsized moves and momentum has always been Nvidia’s friend, to the upside as well as downside. With equity analysts tripping over themselves to reconfigure their already recalibrated S & P 500 targets for 2025 now that stocks have recovered from the post “liberation day” sell-off, betting against Nvidia during any of their momentous moves has been a bad trade. That being said, and after a sensational 55% pop off the recent bottom, an investor must define risk in a bullish options trade. The trade: Selling a put spread Sold the NVDA June 27 $130 Put for $5.75 Bought the NVDA June 27 $120 Put for $2.75 This spread allows an investor to collect $3 or $300 per one put spread NVDA was roughly trading $136 when executed. An investor has to be prepared to own NVDA at $127 down to $120. Risking $700 to make $300 is the risk/reward. DISCLOSURES: Kilburg is long Nvidia and owns this put spread. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
