Tony Zhang's NVIDIA Options Strategy

On CNBC's "Options Action," Tony Zhang said his bullish stance on NVIDIA Corporation NVDA wasn't particularly good on timing so he is taking one more shot. He said that iShares PHLX Semiconductor ET SOXX had a significant move higher last year, but he has seen a pause since the beginning of the year. Zhang sees this setup as a good continuation pattern.

NVIDIA has been stuck between $500 and $590 for the last nine months, said Zhang. He is starting to see some breakouts on an absolute and relative basis above the $590 resistance level and he likes the setup ahead of the earnings report scheduled for Wednesday.

See also: How to Buy NVIDIA Stock

The options market is implying a move of 6% in either direction on earnings and the stock historically moves around 3.8% on the event. Zhang wants to use a trade structure that accounts for that. He wants to sell the June $600/$580 put spread for a credit of $15.85. The trade is going to be profitable if the stock stays above $584.15 at the June expiration.