2024 has been a doozy for stock splits.
One of the hottest stocks on the planet — and one of my current favorite stocks — NVDA did a 10-for-1 split just last month.
Another favorite, Chipotle (CMG) also did one last month…
And coming up before this Monday’s open, another BIG one is about to happen.
But before we get into that, let’s revisit NVDA’s stock split.
Because it’s a perfect example to show you why I have two big rules for playing stock splits.
See, when a stock is trending as strong as NVDA was and it announces a split, my ears perk up.
But I feel bad because a lot of traders are the same way. But they always do it wrong.
One of the top questions I get is: “I want to play the stock split. Do I buy the stock now or wait for it to split?”
Let me tell you, for my money, the answer is always “buy now.” There’s no sense in waiting.
The sooner you own the stock, the sooner you can move on to step #2.
And that’s where most folks make a huge mistake — they stop at the first step.
They buy the stock and then hope and pray that it keeps going up.
Let me tell you, it doesn’t always go up.
Look at what just happened with NVDA this past month.
It is a monster stock in a mega trend — probably one of the hottest stocks of the year — and shortly after it split, it just collapsed almost 15%…
All the way from $140.76 down to $118!
Sometimes that happens — even with a monster stock in a huge trend and the power of AI behind it.
And while the stock has recovered most of that loss, traders who bought at that nearly $141 peak are still waiting for the stock to make a full recovery.
Meanwhile… I’m sitting pretty. Because I don’t just buy a monster stock and hold it.
I make sure that stock starts creating a cashflow for me as soon as I own it.
How do I do that?
I simply sell covered calls against it.
Covered calls instantly let me lower my cost basis… and if I don’t get called out, I just lower my cost basis again.
Round and round until I get called out. By the time that happens, it’s a huge windfall and I just start over.
Ok, so back to the next BIG stock that’s about to split.
The stock is AVGO — and it’s stock that’s as hot as NVDA, even though it doesn’t get as many headlines.
And it’s been in a monster trend for a long time. I’m talking about a years-long trend.
And it’s about to split 10-for-1 after this Friday’s close.
I’m planning to trade it the same way I’ve done with GOOG and NVDA before it.
If you want to see the exact plan, click here and watch the video I recorded for you.
Trade well,
Jack Carter
