Hey Traders,
Last week, I placed a trade on Nvidia (NVDA), and it’s a perfect example of why I’m always telling you to stack the odds in your favor.
Here’s the kicker: NVDA moved against me, and I still walked away a winner.
If I had traded this the way most folks would — by buying a speculative call option, expecting NVDA to rise — I’d be licking my wounds right now. Why? Because most of the week, NVDA didn’t go up.
And by the time the week was over, it didn’t even move in my favor. It just wobbled and then sank.
That’s the problem with straight-up calls. If the stock doesn’t rocket higher, your option burns away, and you’re left with nothing to show for it.
But as you know if you’ve been following me for a while, tat’s not how we play the game.
The Trade That Paid Me to Wait
I placed this trade as a credit spread.
That’s a fancy way of saying I sold options to collect income upfront.
Instead of hoping NVDA would climb higher, I set myself up with a trade that worked as long as NVDA didn’t completely tank.
Here’s what NVDA actually did:
- Between Tuesday when I entered the trade and late Thursday, it wavered in a tight range between about 148.64 and 146.80. Not exactly a rally, right?
- After hours on Thursday, it slipped further, opening Friday morning at 144.70. By mid-afternoon Friday, it had dropped all the way to 140.12.
- Finally, it bounced a bit to close around 142.17, and my trade expired worthless.
If I’d traded a call, I’d be kicking myself — because there wasn’t any real upward momentum to cash in on.
But with the way I traded this, all that sideways and downward movement just made my trade better.
Because when you sell a credit spread, you’re like the house at a casino.
You collect your premium up front and let the time value burn away as the market conditions work in your favor.
NVDA’s waffling price action just burned away the value of that spread, leaving me with pure profit by the time the trade expired.
Why This Worked
Now, as you know from past articles, I didn’t just pick NVDA at random and hope for the best.
My strategy has a few built-in safety nets — like wearing both a belt and suspenders — to keep the odds in my favor:
- I focus on strong, trending stocks – NVDA has been a powerhouse this year, making it a reliable candidate.
- I check for stocks that aren’t too overextended – NVDA wasn’t flying too far above its 20-day trendline, so I wasn’t chasing something primed for a pullback.
- I trade like the house – Selling options lets me collect premium and puts me in a position where the stock doesn’t have to make a huge move in my favor for me to win.
Even when NVDA broke below my tripwire Friday afternoon, it was so late in the trade that anyone who stuck with it came out unscathed. That’s the power of a well-structured setup.
The Big Takeaway
The point here isn’t just to pat myself on the back. It’s to show you why trading smart is better than trading flashy.
If I’d gone into this trade expecting NVDA to soar and bought a speculative call, I’d be walking away with nothing but regret.
Instead, by stacking the odds in my favor with a smart play on a trending stock, I turned a “losing” move into a winning trade.
The market is full of uncertainty, but when you trade with strategies that keep you protected and stack the odds in your favor, you don’t have to rely on perfect predictions.
Next time you’re thinking about jumping into a trade, ask yourself: Am I stacking the odds in my favor, or am I just rolling the dice?
Trade well,
Jack Carter
P.S. Speaking of NVDA, I’m blowing the lid off my NVDA Cash Generation Blueprint. Click here now to learn more.
