Every once and a while the market discounts itself and gives patient investors a chance to get long great values. At the current time the market is discounting great oil and tech stocks for no reason at all. Some of these companies have even reported great numbers. A stock that is currently discounted deeply is Nvidia (NASDAQ:NVDA). Nvidia's discount is purely based on its ties to the PC business as well as economic fears. Nvidia is a great value under $12. Let's see what were buying here.
Recently knocked earnings out of the park with .03 beat.
Controls over 50% of the GPU market with its next largest competitor (NYSE:AMD) falling far behind.
40% of the company is pure cash. This is my favorite metric.
The company is pushing into cell phone processors with its Tegra chip.
The company has recently become more shareholder friendly by implementing a 2.5% dividend.
The company is also trading at the low end of its range between $11.50 and $16.
The play I'm making for those not long the stock is to sell the in the money DEC 22 expiration $12 put for .68. This is a net gain of .46 (3.8%) based on the stock's current price of $11.83. For those already long the stock sell the DEC 22 $12 call for a net gain .46. Annually this play will yield 45.6%.
For those looking to learn more about the benefit of selling options please see here.