Nvidia Corporation (NASDAQ: NVDA ) is the perfect example for the tech space right now. NVDA stock is getting caught up in the selling, but it still boasts a solid uptrend.

Right now, tech stocks just can’t shake the relative weakness that has sprung up post-election. After a valiant catch-up attempt over the past two weeks, the tech-heavy Nasdaq is once again plunging. Heavy hitters from Amazon.com, Inc. (NASDAQ: AMZN ) to Alphabet Inc (NASDAQ: GOOGL ) are being taken to the woodshed today.

But don’t be too hasty in dissing the entire sector. Some of the year’s biggest winners call tech-land home. Take NVDA stock, for instance.

Much to the satisfaction of onlookers, today’s retreat is ushering Nvidia stock to an attractive entry point. Previously, NVDA lovers have been relegated to chasing. Now they’ve been delivered a dip buying opportunity.



Click to Enlarge Source: OptionsAnalytix

At its lows, NVDA was down a harrowing 8% in early morning trading. The volume was elevated suggesting some major distribution going on beneath the surface.

On a bright note, sellers were halted dead in their tracks at the rising 20-day moving average. This oft-watched average is often the first line of defense for selling raids striking uptrends.

Chart watchers should view today’s bounce off the 20-day average as a positive omen. At a minimum, it reveals buyers aren’t willing to abandon their beloved uptrend without a fight.

Not surprisingly, the magnitude of today’s swoon in NVDA stock has lit a fire under the options market. Elevated demand is driving implied volatility higher on the day.

And therein lies opportunity for put sellers.

How to Trade NVDA Stock

If you’re looking for a high-odds avenue to capitalize on today’s weakness, consider selling January put spreads. The elevated option premiums are allowing you to sell far out-of-the-money puts while still capturing a solid return.

For example, if you’re willing to wager that NVDA stock remains above $75 for the next six weeks, you could sell the Jan $75 put while buying the Jan $70 put for a net credit of 50 cents.

The reward is limited to the initial 50 cents and will be captured if Nvidia stock sits above $75 at expiration. The risk is capped at $4.50 and will be forfeited if the stock slips below $70.

To minimize the loss, I suggest bailing if NVDA breaks $75.

As of this writing, Tyler Craig did not hold a position in any of the aforementioned securities.