Earn 10% While You Wait for NVDA on Sale
At about $170.94 a share, NVIDIA (NVDA) is trading about 17% below its 52W high.
Do you think NVDA stock is a good long-term bet at current levels? What about at a 30% discount at about $120 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
10% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 12/18/2026, with a strike price of $120
- Collect roughly $770 in premium per contract (each contract represents 100 shares)
- That’s about 6.4% annualized yield on the $12,000 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 10.4%
- And you give yourself a chance to buy NVDA stock at deep discounted price of $120
This type of yield enhancement is exactly why sophisticated investment advisors work with our Boston-based asset allocation partner – blending tactical income generation with robust core equity strategies.
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| NVDA stays above $120 | You keep the full $770 premium – 6.4% extra income over the next 366 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| NVDA closes below $120 | You’ll be obligated to buy 100 shares at $120. But thanks to $770 premium, your effective cost basis is just $112.3 per share – a roughly 34% from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
First, you want fundamentals to check out. For details, see Buy or Sell NVDA Stock or check NVIDIA Investment Highlights
Second, you want to better understand competitive advantage and industry tailwinds. Below is what specifically gives us the conviction.
Why Hold NVDA Stock Long-Term
NVIDIA’s wide moat, driven by its CUDA ecosystem, and its position at the forefront of the artificial intelligence secular trend make it a compelling long-term holding. The company’s strong financial health further supports the thesis of being comfortable owning the stock for 5+ years, even if assigned.
Competitive Advantage
We classify NVDA’s economic moat as WIDE, with the primary source being Switching Costs
- NVIDIA’s CUDA platform creates a powerful developer lock-in, making it difficult and costly for customers to switch to competitors’ hardware.
- The company reportedly increased GPU prices by up to 15% in May 2025, demonstrating significant pricing power amidst high demand.
- NVIDIA holds a dominant market share in the discrete GPU market, reaching 94% in Q3 2025, indicating a strong competitive advantage.
- The brand is consistently referred to as the ‘de facto standard’ for AI hardware, showcasing immense mindshare and industry dominance.
See NVIDIA Full Analysis.
Industry Tailwind
The industry tailwind is STRONG, with CAGR projection of 18-29% (McKinsey)
Secular Trend: Artificial Intelligence & Machine Learning
Key Risks: Regulatory scrutiny from the US and China, and potential technological disruption from specialized AI hardware and new computing paradigms like neuromorphic and quantum computing.
Financial Guardrails
Cash Generation: Positive Free Cash Flow
Balance Sheet: NVIDIA has a strong balance sheet with more cash and short-term investments than total debt, indicating a very low bankruptcy risk.
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