Not all puts are created equal. Depending on how much you think NVDA will fall, you have three choices:
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Most Bearish (Out-of-the-Money): Buying a $170 Put. It’s cheap, but NVDA has to crash hard for you to win. (Low probability, high payout).
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Moderately Bearish (At-the-Money): Buying a $193 Put. Higher cost, but it starts gaining value the moment the stock drops.
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Least Bearish (In-the-Money): Buying our $218 Put. This is the most expensive, but it has the highest probability of profit because it already has intrinsic value.
👨🏫 Mentor’s Insight: The ‘Intrinsic’ Cushion
“Stephen here. I’m glad we caught that math! This is why I often prefer In-the-Money (ITM) puts for my students.
When you buy a put that already has ‘Intrinsic Value’ (like the $218 put when the stock is at $193), you have a cushion. Even if the stock stays flat, you walk away with a large portion of your money back. If you buy a cheap ‘Out-of-the-Money’ put and the stock stays flat, you lose 100% of your cash.
In our weekly 1-on-1 mentoring sessions, I’ll show you how to find the ‘Sweet Spot’—where you get the leverage you want without taking unnecessary ‘all-or-nothing’ risks. Want to see which NVDA strike has the best balance? Book a Free Strategy Call today and we’ll run the numbers on the live chain.”
🛠️ Stephen’s Implementation Tip:
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Intrinsic vs. Extrinsic: Intrinsic is the “Real” value ($218 – $193). Extrinsic is the “Time” value you paid for. At expiration, the “Time” value always goes to zero!
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Quant Search: Ask Quant any question you may have about the long ptu strategy.