Assuming short timelines, I wonder how much NVIDIA’s stock will increase and if anywhere near a 100x return is possible.
The further out and higher strike price NVIDIA call I could find is at 290$ SP, dated Jan 15 2027, at $13.25. If NVIDIA goes to a 10T market cap I get an 8x return on investment, if the company goes to a 15T market cap I get a ~20x return on investment.
I’m not sure how realistic it is for NVIDIA to increase past a 15 Trillion Market cap. Plus, increased government intervention seems like it would negatively impact profits.
The thing with NVIDIA though is that the IV is so high and so are premiums. I spent a few hours looking for a better trade than that, though I think it’s pretty solid.
I think SPY calls can possibly be much better than NVIDIA calls. The market doesn’t expect the stock market to go up significantly in the next few years, but I think theres a chance it will assuming timelines are short. Here’s the SPY YoY growth during the internet boom in the 90s.
Here we see that from any two year period from 1995-1999, the stock market went up anywhere from 50% to 70%.
Thus, I don’t think it’s unreasonable to think SPY has a good chance of going up 50% − 70% by Jan 15 2027 (to be fair, the past two years had a YoY growth of ~25%)
If you buy a $855 Strike price call for that date and SPY increases 50% by then you get a 12x return. If SPY increases 70% you get a 62x return.
If you buy the highest Strike Price call for that day at $910 and SPY increase by 70%, you get an 83x return.
Something to think about at least. At this time I’m going to buy long dated SPY calls for 2-3 years out at the 800−910 range. Nvidia calls still look good but the premiums are just so expensive because of the companies recent massive growth and volatility, so I think SPY calls are the better option.I’m still thinking about how to hedge incase the upcoming chaos turns the market sour (perhaps a Taiwanese blockade, or NVIDIA profits being hurt by increasing government interference)
If you buy a $855 Strike price call for that date and SPY increases 50% by then you get a 12x return.
I never traded options, but isn’t the return you get critically sensitive on the date before expiration by which the strike price is hit? If this happens just before expiration, my understanding is that the option is worthless: there is no value in exercising an option to buy now at some price if that happens to be the market price. More generally, it makes a big difference whether the strike price is hit one week, one month, or one year before expiration.
Are you making any implicit assumptions in this regard? It would be useful if you could make your calculations explicit.
The option to buy SPY at $855 in January 2027 is going for $1.80 today, because most people don’t expect the price to get that high. But if in fact SPY increases in the intervening time by 50% from its present value ($582), as stipulated by kairos, then the option will ultimately be worth 1.5*582 − 855 ~ $18. I think this is where the 12x figure is coming from.
Dumbass here with close to zero knowledge about finance stuff- why a call? A call is basically an option to buy at a certain price, right? So why would that be better than just buying the stock now at current price?
The main advantage of call options over buying stock directly is leverage—you can control a much larger amount of stock with a much smaller upfront investment. This means your potential returns (as a percentage of what you put in) can be much higher with calls than with regular stock purchases.
However, this leverage comes with higher risk. While buying stock means you own something real that will always have some value, options can expire worthless if your bet doesn’t work out. It’s essentially a tradeoff—calls let you make bigger bets with less money upfront, but you can lose your entire investment if you’re wrong about where the stock is heading.
Assuming short timelines, I wonder how much NVIDIA’s stock will increase and if anywhere near a 100x return is possible.
The further out and higher strike price NVIDIA call I could find is at 290$ SP, dated Jan 15 2027, at $13.25. If NVIDIA goes to a 10T market cap I get an 8x return on investment, if the company goes to a 15T market cap I get a ~20x return on investment.
I’m not sure how realistic it is for NVIDIA to increase past a 15 Trillion Market cap. Plus, increased government intervention seems like it would negatively impact profits.
The thing with NVIDIA though is that the IV is so high and so are premiums. I spent a few hours looking for a better trade than that, though I think it’s pretty solid.
I think SPY calls can possibly be much better than NVIDIA calls. The market doesn’t expect the stock market to go up significantly in the next few years, but I think theres a chance it will assuming timelines are short. Here’s the SPY YoY growth during the internet boom in the 90s.
Year 2000 saw a −9.7% return ($86.54) 1999: +20.4% ($95.88) 1998: +28.7% ($79.65) 1997: +33.5% ($61.89) 1996: +22.5% ($46.37) 1995: +38.0% ($37.85) 1994: +0.4% ($27.42)
Here we see that from any two year period from 1995-1999, the stock market went up anywhere from 50% to 70%.
Thus, I don’t think it’s unreasonable to think SPY has a good chance of going up 50% − 70% by Jan 15 2027 (to be fair, the past two years had a YoY growth of ~25%)
If you buy a $855 Strike price call for that date and SPY increases 50% by then you get a 12x return. If SPY increases 70% you get a 62x return.
If you buy the highest Strike Price call for that day at $910 and SPY increase by 70%, you get an 83x return.
Something to think about at least. At this time I’m going to buy long dated SPY calls for 2-3 years out at the 800−910 range. Nvidia calls still look good but the premiums are just so expensive because of the companies recent massive growth and volatility, so I think SPY calls are the better option.I’m still thinking about how to hedge incase the upcoming chaos turns the market sour (perhaps a Taiwanese blockade, or NVIDIA profits being hurt by increasing government interference)
This is looking like a February 2020 moment.
Why SPY over QQQ?
I never traded options, but isn’t the return you get critically sensitive on the date before expiration by which the strike price is hit? If this happens just before expiration, my understanding is that the option is worthless: there is no value in exercising an option to buy now at some price if that happens to be the market price. More generally, it makes a big difference whether the strike price is hit one week, one month, or one year before expiration.
Are you making any implicit assumptions in this regard? It would be useful if you could make your calculations explicit.
The option to buy SPY at $855 in January 2027 is going for $1.80 today, because most people don’t expect the price to get that high. But if in fact SPY increases in the intervening time by 50% from its present value ($582), as stipulated by kairos, then the option will ultimately be worth 1.5*582 − 855 ~ $18. I think this is where the 12x figure is coming from.
Thanks—I understand now. I thought $855 was the price SPY would reach if the current price increased by 50%.
Dumbass here with close to zero knowledge about finance stuff- why a call? A call is basically an option to buy at a certain price, right? So why would that be better than just buying the stock now at current price?
The main advantage of call options over buying stock directly is leverage—you can control a much larger amount of stock with a much smaller upfront investment. This means your potential returns (as a percentage of what you put in) can be much higher with calls than with regular stock purchases.
However, this leverage comes with higher risk. While buying stock means you own something real that will always have some value, options can expire worthless if your bet doesn’t work out. It’s essentially a tradeoff—calls let you make bigger bets with less money upfront, but you can lose your entire investment if you’re wrong about where the stock is heading.