To execute a strategy to sell NVDA stock effectively when it's currently trading at $140.35, the approach you've outlined — selling a covered call (CC) at 150 and layering a butterfly spread up to 165 — is a smart way to manage potential upside while generating premium. Here’s a breakdown of this strategy and some best practices to consider:
Strategy Overview
1. Sell Covered Call (CC) at $150
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What it means: You own the NVDA shares, and you sell a call option at $150 strike price (e.g., for 1-2 weeks out).
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Goal: Earn premium while capping your upside at $150.
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Benefit: Collect income if NVDA stays below $150.
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Risk: If NVDA spikes above $150, you may be forced to sell your shares at that strike, capping your gain.
2. Buy Butterfly Spread (150/157.5/165)
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Structure:
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Buy 1 call at $150 (to close your short CC leg if needed),
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Sell 2 calls at $157.5,
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Buy 1 call at $165.
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Goal: Profit from a sharp rally without buying more stock.
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Butterfly payoff: Peaks at $157.5 but provides some exposure if NVDA flies up to $165.
Why This Combo Works
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Downside protected: You hold NVDA shares.
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Flat to moderate upside: Covered call pays you a steady income.
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Sharp rally hedge: Butterfly lets you benefit if NVDA pops past $150.
Example Scenario
NVDA at $140.35
Target expiration: 2 weeks out
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Sell 1x $150 CC for ~$1.50 (depending on IV expiry)
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Buy butterfly:
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Buy 1x $150 call (~$1.50)
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Sell 2x $157.5 calls (~$0.80 each)
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Buy 1x $165 call (~$0.25)
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Net cost of butterfly: ~$0.15–$0.25
Total premium collected: CC ($1.50) – Butterfly ($0.25) ≈ $1.25 net income
Key Considerations
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Timing: Shorter-dated options (1-2 weeks) maximize theta decay.
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IV (Implied Volatility): Higher IV boosts premiums but also increases risk.
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Adjustment: If NVDA hits $150, roll the CC up and out to higher strikes.
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Exiting: Close the butterfly if NVDA runs past $160 to lock in gains.
Summary
This hybrid strategy:
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Monetizes a flat or gently rising market (via CC),
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Adds a low-cost bullish lottery ticket (butterfly),
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And is ideal when you believe NVDA has room to spike — but not certainty.
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