NVDA technicals are bullish; momentum is rising and a call spread is suggested for upside potential.

Well, Nvidia is about to achieve another milestone; it seems like one achievement after another. Yes, I wanted to give you some broader context with Nvidia first through my first graphic, which is a three-year weekly chart.

It gives you an idea of where we came from, where the stock was trading here about 3 years ago, at less than $40 a share. Over the past three years, we have grown by more than 425%.

I mentioned the fact that the stock reached record highs just yesterday, up about 28% so far this year.

Now remember, the stock has made good gains so far this year, but these gains have only recently emerged as the stock has returned to record levels because we have seen a consolidation zone between 190 and 210 for several months.

This was in the middle of summer, when we were unable to get a strong upward push for this stock. It has been trading below its 50-day simple moving average, and the 200-day moving average has been a good support area repeatedly over the past nine months or so.

But we've moved back above the 210 level we broke through, and we've broken upwards, and now we're off in the race to the top. If you look at the momentum here, we have the Relative Strength Index (RSI) here at the bottom.

It is currently at around 67. So, it is slightly below the overbought zone, but the momentum is still trending upwards here in this basic momentum chart.

What are the support and resistance zones here? Well, since we've broken through the 210 level, as I mentioned, that was a major resistance zone. We have broken through those levels.

Now you are here at around 221, around that 50-day simple moving average. That's probably a good baseline for landing. We have some other areas around here at about 226 as well, but we don't have real context above what we have now.

It looks like this stock will open at around 241 here in premarket trading, which would be a new record high, Diane. Well, with this rise, we saw implied volatility levels decline.

The company will not announce its earnings until November 17, so we have some time.

Therefore, I looked at a strategy whereby I could take a directional approach, offsetting part of the cost and using options market pricing over a specific time frame to give me context for what we think the stock will go towards.

If I'm feeling optimistic, this is just a trial run where I would choose the weekly October 30th cycle. So there are 24 days until expiry, which gives me 3.5 weeks in this center.

I will buy the call option at an execution price of 240, which is within the money range (In the money). This is the optimistic part of the strategy. Conversely, I will sell the call option at an execution price of 255.

So it is a bullish (Call vertical) option buy and sell transaction with a spread of $15. I would pay a debit cost of approximately $6 if the stock opened at around $241. This will be my risk, $600 per position that can expand to $15 or $1500 if we go back above the 250 level or reach the 255 level.

So you have a good risk and return setup in this trade.

If you pay $6 as a cost, the break-even point becomes 246 here. This is the level I need the stock to surpass. This is less than 2% above the current share price, as the stock will open at around 241 here.

Therefore, I don't need a large percentage movement to get past this break-even point.

If you look at buying vertical directional options like this, why did you choose the buy option with an execution price of 255 for sale? Well, the options market for the October 30 weekly session is pricing in a move up or down of about $16.

This is essentially in line with the execution price of 255. So, a very good risk and reward setup to buy a vertical directional option in Nvidia if you think the stock will go up.

If you believe the stock will go down or decline, this is not the right strategy. However, I think one of the keys is that you still have 24 days until expiry and you only need a 1.8% movement to get past the breakeven point.

Good. Well, Nvidia is on the verge of entering a new territory here.