Option Play To Capture Potential Upside From Nvidia Chief China Trip?

The report of Jensen Huang joining President Trump’s delegation to China is a significant geopolitical and market sentiment driver. It suggests a potential thawing or at least a high-level dialogue regarding the "chip curtain" that has restricted Nvidia's H20 and Blackwell-series sales in the Chinese market.

We are holding Nvidia long-term, hence, we would like to use Bull Put spread to capture any upside that might be trigger as a result of the China trip as well as influences from Computex tradeshow in early June and the high expectations for the Blackwell B300 chip ramp-up.

Here is an analysis of the current setup for Nvidia and the broader semiconductor sector:

Nvidia (NVDA) Outlook & Technicals

As of Wednesday, May 13, 2026, $NVIDIA(NVDA)$ closed at $225.83, marking a new all-time high.

Pre-Earnings Momentum: Nvidia is scheduled to report its Q1 FY2027 earnings on Wednesday, May 20, 2026, after the market closes. Historically, Nvidia often experiences a "run-up" into earnings. Technical indicators show a bullish trend with the price well above the 20-day EMA ($203) and 50-day EMA ($188).

Target Levels: With the stock currently in "price discovery" mode (all-time highs), the next psychological and technical resistance levels are projected at $230 and $240.

Risk: The primary risk is a "sell-the-news" event if the China trip results in no tangible trade concessions or if earnings guidance for the Blackwell ramp-up is viewed as merely "meeting" rather than "crushing" expectations.

Opportunities in the Chip Sector

Beyond Nvidia, several "Physical AI" and infrastructure plays are gaining traction in 2026:

• Memory Manufacturers (Micron, SK Hynix): High Bandwidth Memory (HBM3e/HBM4) remains in severe shortage. Reports suggest 50% price spikes by mid-year, benefiting memory suppliers.

• Custom Silicon & Physical AI: Companies involved in robotics and edge-AI (like those using Nvidia’s Jetson Thor platform) are seeing increased demand as AI moves into autonomous systems and factory automation.

• Broadcom (AVGO) & Marvell (MRVL): As hyperscalers ( $Meta Platforms, Inc.(META)$, $Alphabet(GOOGL)$ Google, $Microsoft(MSFT)$) continue their CapEx binge, the networking and custom ASIC (Application-Specific Integrated Circuit) providers are secondary beneficiaries of the data center expansion.

Bull Put Spread Strategy (60-Day Expiration)

A Bull Put spread with a 60-day expiration (likely targeting July 2026) is a defensive-to-neutral strategy. It allows you to profit from time decay () and volatility crush after the May 20 earnings, as long as the price stays above your short strike.

Suggested Strike Selection

Given the current price of $225.83 and the upcoming earnings volatility:

Expected Move and Our Proposed Option Play (Bull Put Spread)

As of May 14, 2026, the market is pricing in a significant move for Nvidia (NVDA) leading into the summer. Based on the options chain and the at-the-money straddle for the July 17, 2026 monthly expiration (the closest date to your July 18 request), the expected move is approximately +-$29.53.

This represents an implied volatility-driven swing of about 13.5% from the current price of $225.83.

We would prefer the aggressive level with expiration date on 17 July 2026.

The expected move is also being influenced by the Computex tradeshow in early June and the high expectations for the Blackwell B300 chip ramp-up. Analysts from BofA and Citi have recently raised price targets to the $300 - $320 range, suggesting that while the "expected move" identifies the immediate volatility, the long-term institutional bias remains heavily skewed toward the upper bound.

Strategic Considerations

• Volatility: Implied Volatility (IV) usually peaks just before earnings. Selling the spread now or early next week allows you to capture high premiums that will likely "crush" (decrease) after the May 20 report, benefiting the seller.

• The 60-Day Window: A 60-day duration is generally considered a "sweet spot" for credit spreads. It provides enough time for the stock to recover from a minor post-earnings dip while still offering meaningful premium.

• Support Floor: The $205 level has flipped from resistance to major support. Setting your short strike at or below $200 provides a ~12% "cushion" from current prices.

Note: Earnings trades involve high risk. While a Bull Put spread limits your maximum loss compared to being long the stock, a significant earnings miss could still result in a maximum loss if the stock gabs below your long strike.

Summary

A Bull Put spread on Nvidia (NVDA) is a strategic way to capitalize on the stock’s current momentum and the high implied volatility surrounding the upcoming May 20 earnings report. By selling a higher strike put and buying a lower strike put, you generate an upfront credit while defining your maximum risk.

The Strategy: 60-Day July Expiration

Using a 60-day window allows you to capture a significant "volatility crush" after earnings. When Nvidia reports, the uncertainty vanishes, causing option prices to drop sharply, which benefits you as the seller of the spread.

• Conservative Approach (Short $200 / Long $190): This setup places your "break-even" point below the 50-day EMA ($188) and the psychological $200 support level. It offers a higher probability of profit, as Nvidia would need to drop more than 12% for the trade to be challenged. This is ideal if you want a wider margin of safety against post-earnings "sell-the-news" fluctuations.

• Aggressive Approach (Short $215 / Long $205): This targets the recent breakout zone. While it yields a much higher credit, it is riskier because the stock has less room to breathe. If Nvidia’s guidance doesn't perfectly match the hype of the China trip and Blackwell ramp-up, a minor pullback could quickly put this spread "in the money."

Market Context

With Nvidia in price discovery at $225.83, the technical trend is undeniably bullish. The Jensen Huang/China news acts as a powerful tailwind, potentially raising the "floor" for the entire semiconductor sector.

Summary Recommendation: If your priority is capital preservation, the $200/$190 spread is the preferred play. It allows you to be "wrong" about the immediate price action while still profiting from time decay and the eventual stabilization of the stock price through June and July. Ensure the total credit received justifies the risk-to-reward ratio before execution.

Appreciate if you could share your thoughts in the comment section whether you think a 60-day expiration period Bull Put spread would be appropriate for capturing any upside from Nvidia.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.