How Subscribers Bagged Major Profits in Just 4 Days

Subscribers to Chart of the Week received this commentary on Sunday, May 10.

Here at Schaeffer’s, we like to pride ourselves on bringing guidance and direction during uncertain times on Wall Street. This past week we got to do just that, while also bringing in impressive profits to subscribers of our In-the-Money Countdown bulletin. In fact, subscribers scored big on both our Nvidia Corp (NASDAQ:NVDA) and Freeport-McMoRan Inc (NYSE:FCX) picks, reeling in profits of 152% and 151%, respectively, in just four days.

Both picks, provided by Senior Market Analyst Matthew Timpane, were sent out to subscribers this past Sunday, May 3 and entered on Monday morning. Below, Matt gives us some insight on why he chose the NVDA weekly 5/8 190-strike call and the FCX weekly 5/8 53-strike call, including specific drivers and their backed technical data.

The Chip Stock You Can’t Shake

Per Timpane, Nvidia has, to a relative degree, been the dog of the bunch for semiconductor stocks, as many had rotated out to other big movers in the AI space. However, with earnings reports slated for this past week from Advanced Micro Devices (AMD) and Arm Holdings (ARM), he felt NVDA would be a great sympathy play. The stock price was trading into the 20-day moving average and at the pivot zone that appeared both in this past February and October, where we had seen more violent reactions above this level -- even if short-lived.

This was also the spot of the 38.2% Fibonacci Retracement level from the stock’s recent low to high, adding to the confluence. Additionally, there was 197.50-strike put support and Max Pain that rolled higher through earnings, as NVDA has expiring options now three times per week. A move back above the 200-strike could easily ignite a short-term move up the call stack to the 210-215 range.

Options looked like an affordable route too, per Nvidia stock’s low Schaeffer's Volatility Index (SVI). The fact that competitors had earnings being priced in the 4th percentile, only a small move was all we needed. Therefore, in less than a week subscribers were able to pocket a profit of 152% on the Nvidia weekly 5/8 190-strike call.

Mining All the Way

Timpane was eyeing a move late Friday for a Monday morning entry into Freeport-McMoRan stock at the 126-day moving average, where it bounced in mid-March. This also happened to where the 55-strike put, +10% year-to-date level, and the previous pivot point from its March capitulation low all resided.

Broadly, the AI trade had picked up steam once again, but after a double beat in late April, FCX got sold off into the support level. However, copper was holding up strong, and the AI buildout heavily relies upon copper as a key material. Max Pain for this week was $62, so if all things remained the same (ceteris paribus), we could expect a move up towards the level towards end of week and did not have call resistance until $67.

The $62 area was also the spot of the 50-day moving average, while the year-to-date anchored volume weighted average price (AVWAP) was in the vicinity, so it’s a logical target to the upside without expecting to break out of resistance. In other words, we had freedom of movement to watch this play out.

On top of that, there was potential for a put unwind, with the stock’s 50-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranking higher than 91% of annual readings.

Lastly, FCX’s Schaeffer's Volatility Scorecard (SVS) sat at a high 91 out of 100, indicating it had tended to exceed option traders' volatility expectations in the past year. Within four sessions the equity climbed to its highest mark in over a week, allowing subscribers to take home a 151% profit on the Freeport-McMoRan weekly 5/8 53-strike call.

Don’t shy away from bringing in profits! Join us in noting the six events that could be market movers this summer and don’t forget to subscribe before June’s In-the-Money Countdown bulletin is published!