$NVDA · Schwab Network · 2026-10-30

Welcome back to Fast Money on Schwab, where Nvidia shares are feeling the heat of the tech sell-off , with its stock down 4% today.

The AI giant's stock is on track to end October down more than 9%, marking its worst monthly performance in almost a year. Nvidia's stock has been up by more than 10% since the beginning of the year to date.

Although some have not given up completely, 96% of analysts still recommend buying, with an average price target indicating a potential upside of over 60%. Today, Raymond James reiterates its "strong buy" recommendation, arguing that Nvidia will benefit from the continued growth of Amazon's cloud business.

Well, it's time for a power struggle over Nvidia's stock. Okay, before we move on to your trading examples, I want to know what each of you thinks about the AI giant. Kevin, I'll start with you. What is your opinion of Nvidia?

The 200-day moving average for Nvidia stock on the Thinkorswim platform is around $204.39. The stock has almost reached that level, just a few cents away from it.

So , these sales, let's face it. If these sales are about artificial intelligence, spending on it, and discomfort with that spending, where does each company we're talking about lead us? To Nvidia, right?

There are questions about the extent of this stock's reach and market value, and there are many reasons why this stock is the first indicator that will be affected if the market experiences a sell-off.

I don't think there is any structural flaw in Nvidia. I believe that demand and all the factors are still in place. This is nothing more than... a drop of $30 or $40 in the stock price now.

Therefore, I think many traders and investors should take a closer look at Nvidia , as the stock has significantly corrected its course from its recent peak, and there is no decline in demand or business.

Good. Tom, what do you think of Nvidia? Okay, let's take a look at the numbers. I mean, the last time they reported, they achieved a growth rate of 106% year-on-year. Profit margins reached 75%.

This represents roughly double what some of their competitors in the chip sector are currently achieving.

They have exceeded expectations and raised their targets quarter after quarter , haven't they? But they are still, you know, not immune to the overall market movements and the sentiment we're seeing in the technology sector this month.

We're down 10.5% so far in October. So, yes, this is another stock that wants to get through this month and start over. Now, they will release the earnings report on the seventeenth.

We must keep that in mind. On November 17th, so this could be a motivating factor that we can monitor .

Looking at the chart, I think the 16% pullback we've seen from its all-time high, which was just a few weeks ago when the stock was above $243 , puts us at the 200-day simple moving average .

The stock has broken through this level a few times over the past twelve months, but it usually corrects very quickly when it falls below its 200-day simple moving average. I'm not sure if that will happen again, but I think we're at a key support level here in terms of the stock price and the price action we 've seen in this massive decline over the past few weeks.

It is not surprising that my Papermont Money deal is on the upside. So, what I looked at was that Tom was right about the earnings on November 17, so I stayed ahead of that date.

I went to the expiration date on November 13, which is about two weeks away, and looked at the expected movement for that period, about $10 as you can see. Oh yes, actually it's about $14.

So, it's actually a little higher than that. And now, until November 13th. So, what I looked at was just a $10 vertical "long call" strategy. I looked at buying "Kool" at 205 and selling "Kool" at 215 as a vertical trade, spending about $4.30, and it is now trading below $4 as the market dropped before we started the live broadcast.

So, it's trading at around $3.90 now, but Tom, it's just a $10 vertical long call before the earnings report, spending a little over a third of the value to complete it. The $10 deal is trading at around $4, or $3.90, Tom.

The risk in this difference is in the amount paid (the discount), and you are looking for this difference to reach or approach $10.

Okay, let's analyze Kevin's typical deal here. This is an example of a bullish trade using a vertical buy option. There will be some similarities between Kevin's deal and mine when I put it out there, because he uses weekly November 13 options that expire in 14 days.

Why? Well, they have earnings on the 17th of the month, and that may pose a risk resulting from a particular event and cause more volatility, but if you believe the stock will recover during the next two weeks before those earnings, then this option expires on the 13th.

Buying a call option at an execution price of 205 is practically at the market price, isn't it? To offset some of the cost of buying this bullish call option, Kevin considered selling the call option at an strike price of 215.

So, you are paying for a bullish vertical call option with a range of $10, and as Kevin mentioned, it is currently trading at around 390 because the stock has continued to decline, but the amount you are paying will be your risk.

So, if you pay 425, as we have here, you have a risk of $425. If you pay 390, you have a risk of $390.

That risk could expand to $10 if we move back above the 215 level in this trade. Now, you mentioned that Kevin is buying a call option at an execution price of 205. If you just wanted to buy that call option for a bullish trade, it would cost you about $6.20.

So, this will be your risk in that deal. So, Kevin has made up for some of the cost, since the options market is pricing in a move of plus or minus $13 to $14 over the next two weeks, right?

In either direction. So, Kevin raised $10 from the call option he bought to an execution price of 215. Its value is slightly over $2.30. So, you are offsetting the cost. Now, you are limiting some of your profits instead of buying the 205 option directly.

So, I think this is one way you can use the options market to reduce your exposure and risk in that. This also reduces your profitability . But what are the chances that the stock will return above the $215 level or reach $220 if it rises to that level?

You start losing better odds as it reaches this high because you only have 14 days in this position. But it is definitely an upside deal with a risk equal to the amount paid in this deal.

Kevin, I've taken a more conservative approach to my trades, but I've used the same weekly November 13 options that expire in two weeks where I would sell a vertical call option outside the price range.

If you think the stock has peaked, or perhaps there will be headwinds over the next two weeks. You may own shares and want to make some return on them, so this is one way you can look at it.

But I looked at selling a vertical call option out of range, selling the 215 option for November 13th, and buying the 220 option. Earlier, it was trading at $1.20, but the stock has dropped, so it is now trading at only about $1.05.

But the balance you accumulate is what you can actually achieve. So, if you accumulate $1.20, that's $120 with a risk of $380. You have a greater risk than the reward, but that's because I have a better chance of success.

Kevin's deal needs a move to get past the breakeven point of approximately $209 , doesn't it? My deals are more conservative, aren't they? If I am wrong and the stock rises but remains below the breakeven point of 216.20, I can still make a profit, but for this reason my risk is greater than my return.

Kevin, what are your thoughts on the short vertical connection option? Interestingly, we use the same short execution rate. I am using the 215 option for November 13 as the maximum for my trade, and Tom is using it on the downside to neutral as the minimum for his trade.

Thus, we are looking at a level approximately $10 higher than the stock's trading price. As you know , the real difference between these deals is that if nothing happens, Tom wins.

If nothing happens, my deals are not profitable. But if a move towards $215 occurs, my trades could be more profitable. Tom has a greater risk if the stock rises towards $220. This is the difference between the long and short vertical option, and it's always a great discussion, Diane.