Big Waves & NVIDIA

Heather Cullen

Heather Cullen

In The Money

Heather Cullen Blog ITM In The Money NVIDIA Big Waves

Big Waves & NVIDIA.

Well, last week it was all about NVDIA. What a ride!

I know NVDA is a single stock and I caution about getting involved with individual stocks, but NVIDIA was important last week because it was reporting earnings and guidance which was going to affect the whole market. We were at an interesting level, with indexes making new highs, but on very small increases, almost as though it was getting ready to retrace.

SPY was going sideways and QQQ had been going sideways for almost a month, so there were a lot of people watching NVDIA, which has been a star performer. At the start of 2023 it was trading at $140, and last week it hit $740 – a huge increase for a mega stock.

NVIDIA's Week.

Last week started badly for NVDA. After the holiday on Monday, it proceeded to drop significantly for the next 2 days to below $675. 

Heather Cullen Blog ITM In The Money NVIDIA Big Waves

I was watching, and was not hopeful as earnings news often leaks out before the announcement so I assumed that people in the know were bailing out of their positions. I decided not to depress myself by staying up and watching (I am in Australia).

It was a lovely surprise to wake up on Friday to the news that the Nasdaq had gone up almost 3%! If I had been holding NVDA options (which I wasn’t) I would have been even happier as it rose to $785, more than a 16% increase. This is one of the few occasions holding an OTM option would have paid off handsomely.

A rising tide lifts all boats

It benefited ITM as well; both SPY and SPYG rose nicely and it put paid to the doom and gloom merchants, at least for a couple of days!

ITM Bear Update

As I mentioned, I am updating the ITM bear book to cover the time right up until January 2024. This graph was one of the ones I was updating:

It struck me that we had a really rough time from the start of 2022 until midway through 2023. Comparatively, it was a long bear market. What a time to publish a book on a bull market strategy! However, If you stuck with ITM, including sitting on the sidelines for more than a year, you should be up quite nicely now.

To the markets . .

It was a good week. Everything was about the tech rally and the NVDIA results, but the whole market benefitted.

SPY Charts

The gap up corresponded with the NVDA results, so we are back over the 10 SMA again. If you had entered after the golden cross around $433, with SPY now trading at $508 then you would be up 34% if you used a 50% strike and 41% if you used a 60% strike.

Not bad for just over 3 months!

Keeping things in perspective, we see that we have been over the previous resistance line for most of 2024. It is not yet a support line as it hasn’t been tested – and we hope that it isn’t going to be as it is now significantly under where the market is now.

SPYG Charts

SPYG has been going up pretty well lock-step with SPY. If you had bought in at the golden cross way back in March when SPYG was at $55 then with it now trading over $71 you would now be up 58% with a 50% strike, or 70% with a 60% strike.

Yes, ITMS performance looks better than ITM performance, but remember that we have been in this trade for almost a year compared with less than 4 months in the SPY trade.

Heather Cullen Blog ITM In The Money NVIDIA Big Waves

Keeping things in perspective, let’s look at the weekly chart. We can see that SPYG, unlike SPY, has not yet reached its 2021 highs, but is closing fast.

QQQ Charts

The QQQ Chart shows that Thursday was an all-time high, with a smallish retracement on Friday. Perfectly normal, people would be ‘taking profits’, especially since it was a Friday, so we won’t read too much into that. QQQ is not part of the ITM strategy, but we keep an eye on it as it is a large part of the market. However, if we had been using ITM on it we would not be up around 94% on a 50% strike and 113% on a 60% strike.  

Heather Cullen Blog ITM In The Money NVIDIA Big Waves

Keeping things in perspective:

VIX Chart

The VIX is still at a very low level.


Heather Cullen Blog ITMeter

The week ahead . . .

We are still in earnings season, but nothing as dramatic as NVDIA is expected. January’s personal consumption data is released on Thursday, and so traders will be watching that for clues about inflation. Skittishness will still probably be in evidence!

The futures

Heather Cullen Blog ITM In The Money NVIDIA Big Waves

The futures are down slightly (5 hours to market open) – so we will have to wait to see what happens.

Fingers crossed for another good week!


Comments, Questions & Answers.

16 thoughts on “Big Waves & NVIDIA”

  1. Hi Heather,

    I hope you’re enjoying your holiday.While basking in the Summer sun here’s a thought.
    What would the results be if instead of using the normal SPY stock futures with your system, you used Bitcoin futures.
    I bet the results would be very interesting and would have the advantage of eliminating the inflationary component of the dollar.

    1. HI Ron – not sure I am following you. I only use the SPY& futures as an indication before market open, not actually trading them. Do you think that the bitoin futures would be more accurate?
      Am I understanding you correcly?

  2. Hi Heather,

    I am not getting email notifications for your blogs which I use to get it earlier

    Can you please check and advise

    Kishore Jain

    1. Hi Kishore
      I am getting quite a few of these nnotifications and the open rate for emails has gone down from 86% to 11% in the past 3 weeks. Clearly something is wrong at the MailChimp end.
      I will try to raise it with them (although its hard – you have to get past all the ‘bots before you can even chat with a person) but in the meantime please just fill out another contactform, that should put you back on the list.
      Sorry – and thank you!

    2. Hi Kishore
      I am getting quite a few of these nnotifications and the open rate for emails has gone down from 86% to 11% in the past 3 weeks. Clearly something is wrong at the MailChimp end.
      I will try to raise it with them (although its hard – you have to get past all the ‘bots before you can even chat with a person) but in the meantime please just fill out another contactform, that should put you back on the list.
      Sorry – and thank you!

    1. Hi Jonathon
      there is no membership – the blog is free and open to anyone. If you wish to stop getting the weekly email notifications just click on ‘Unsubscribe’.

  3. Heather, something is bothering me can you help You must have very many followers after your excellent books, web site, etc. I am questioning whether they are just readers or are they following and using the ITM system I ask this because 100 accounts with $100K to invest equals about 400 option contracts (and I would have thought this is a large underestimate). When I look at the option chains in the approximate sweet spot for DITM contacts I see only 5 here maybe 10 there etc etc No large numbers of contracts whatsoever. Am I missing something?

    1. Hi Rob
      Good question! This had me checking through the options chains to see! People buy in at different times and different strikes so it is hard to get an accurate figure on it but let me try.
      1. We got our ITM IN Signal January 23 when SPY was trading at approx. $400 so people would have bought Jun 23 – Jan 24 expiry options with strikes $200 – $250. The problem is, of course that they have now expired so I can’t get any figures on them.
      2. Another signal was late March 2023, SPY trading at less than $400, so expiries of September 23 – March 24, still with strikes $200 – $250. Can only get figures for March 24 expiry, but hopefully most people have rolled by this time. OI is 60 contracts.
      3. The only signal we can really measure is the one on November 23, SPY trading at $430. Expiry March 24 – Nov 24, strike $215 – $270. OI March 24: 259, OI June 24: 337, OI Sep 24: 0, OI Dec 24: 1,647, OI Jan 25: 356. (Total: 2,599)
      If we assume that some people will have gone for higher strikes, then the numbers increase greatly: for strikes between $270 – $300 the numbers are:
      OI March 24: 1,060, OI June 24: 1,600, OI Sep 24: 0, OI Dec 24: 720, OI Jan 25: 739. (Total: 4,199)
      So, the numbers are not huge. 86% of contracts are OTM, very few DITM. ITM is the only strategy – to my knowledge – that uses them, so there is a fair chance that quite a few of these are people following the ITM strategy.
      I certainly do it myself, using around half my capital for this strategy, so my numbers are included in the above.
      So – no, you are not missing anything. The numbers aren’t huge, and some people will be following the ITMS strategy – but my brain is hurting from doing all that adding up in my head!

  4. Hi Heather, i am sure you have answered this before, but i cannot find any comment in the blogs… so, sorry, but just curious about the QQQ and if the same rules would apply using the ITM with that ETF option. I like that the swings are more up and down, less sideway, and a litter cheaper….. but not sure if same principles could apply and if it has been back-tested. Love all your work!

    1. Hi Brian
      I personally use ITM on QQQ and it has been very good to me, but I don’t recommend it in books as I have to be sure that I can substantiate any claims and I haven’t backtested it thoroughly. I only recommend things where I can give actual results.
      Backtesting QQQ is on the ‘TODO’ list, just have to update the Bear book first. I will get there!

  5. Hello Ms. Cullen! I read your bio and it is very impressive. If I get your 2 books “In the Money Bull Market Strategy” and “In the Money Bear Market Strategy”, would these two cover everything I need to know to implement your program? Would $40,000 in cash be enough to implement your program? Also, I’m looking to manage my Mom’s account but she’s retired and isn’t looking for growth, but rather monthly income. Can your strategy be used for monthly income generation as well, or is it only used for long-term growth? Can your strategy be easily back-tested too? Thank you for your time!

    1. Hi Rob
      Yes, those are all you need, although you may find “Timing the Market’ interesting as an alternative & simpler strategy. To take your questions:
      1. The Bull market strategy is the most relevant as a first book, and needs to be read before the second, otherwise the Bear book may not make sense. I would hold off buying the bear book for a couple of weeks as I am updating it to 2024 so that it will include the 22-23 bear.
      2. Yes, $40K is plenty. If you take the 60% strike then you will be paying around $20k per SPY option so you could get 2 of them, or if the 50% strike then you could do 1 SPY option at around $25k and 4 SPYG options.
      3. Re an income strategy – ITM is not suitable for income generation, it is for capital growth. That said, I live off my trading results, just draw down some capital but make sure the bottom line is still increasing. There are 3 generally-used income strategies: dividends, covered calls and selling cash-secured puts. Dividends require you to hold stocks, which i am not a fan of, selling covered calls is something I have looked at in several blog posts and questions and I can’t see it is worthwhile income-wise, and selling cash-secured puts the same objection. However, many people follow the Wheel strategy and say that it works for them. I looked at it a few blog posts back (Reinventing the Wheel from memory) sp you may want to read that and the subsequent one in conjunction with other info about the Wheel.
      4. 4. Backtesting – Yes, it can be backtested. If you look at the backtesting downloads from 2023 then you get the actual spreadsheets, but they are based on actually eyeballing the charts. The 2024 update gives the methodology to duplicate the backtesting system, and pdfs of the actual spreadsheets.
      Hope this all helps, please get back to me it not.

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