Hold on to your electronics, folks. We’re facing a semiconductor chip shortage. These tiny chips operate as the “brain” for a million different products — computers, cellphones, TVs, game consoles, vehicles… these little babies are everywhere. But with such a huge reliance on chips in this tech-heavy world, certain industries are suffering as supply struggles to keep up with demand amid a global pandemic… With so many companies depending on semiconductors for their products, is there a way for investors to trade the semiconductor chip shortage?
Global sales for semiconductor chips increased to almost 7% in 2020 — this highlights the growing demand companies have for these electronic brains. This is especially true in the automotive and electric vehicle (EV) market place; semiconductors are what make EV’s so efficient and smart.
For example, General Motors, a chip-reliant car company, is temporarily shutting down at three assembly plants because of the shortage. This extreme step is to ensure that the company has enough semiconductor chips to make its more popular and profitable vehicles.
And that’s why I want to talk about Nvidia and AMD — the king and queen of the semiconductor sector — and how you could use these stocks to trade the semiconductor chip shortage.
Let’s start with the charts. Nvidia (Nasdaq: NVDA) has been consolidating around its baseline since September 2020, not doing much of anything. But when this five-month long consolidation finally pops up or down, the built-up energy will be released in an explosive way.
I’ve also noticed over these past couple of trading sessions that there’s a massive amount of call buying going on for this week and next week.
It looks like the call buying is going all the way into the February monthly $700 calls… That means someone thinks the stock is going to pop up $110.
And what’s a catalyst happening soon that could trigger movement in NVDA’s stock? Earnings on Feb. 24 — just in time for the Feb. 26 call options to expire.
Based on everything I’m watching, I expect to see bullish momentum, implied volatility and an increase of volume.
Now, as for the queen of semiconductors, I want to trade her a little differently…
Make sure to watch my video below to learn how to trade the semiconductor chip shortage. As always, leave your thoughts in the comments section below and don’t forget to subscribe to my YouTube channel to stay up to date with all things options trading.
P.S. After watching how to trade a semiconductor chip shortage, read this:
GME, AMC and BB… forget about all of them for a second.
Because, sure… those “hot” stocks were exciting for a moment — but they aren’t going to bring you continued wealth, and it cost some people a lot of money playing around with those.
Instead you should focus on trades like these.
Sure, none of them were 6,000% winners like GME was… but that was a fluke.
These are trades that happen every single month on the same day… and they were closed on the same day.
That’s the beauty: A set schedule for your trades.
That could bring in real profitable opportunities.