Back in 2017 I had the fortune to buy 1000 shares of NVDA. The price was just over $35. As you may know, it is currently north of $600. There have been a couple of 50% drops along the way, but as I get older I've become more like my late father-in-law who never sold anything.

At any rate, to keep my monkey-mind occupied over the last year I've followed NVDA on a weekly chart with a simple buying approach to at-the-money calls. Whenever NVDA crosses above its 3-week simple moving average I buy ATM calls with six weeks until expiration (NVDA has weekly options). The options are held until the price drops below the SMA or for a max of five weeks.

Since 2014 the strategy has had one losing year. No compounding. Here are the yearly summaries:

      Trades  Ave Return
2014    9       20.7%
2015   12      - 2.8
2016    9       83.8
2017    9       54.8
2018   12        8.2
2019    9       48.5
2020    9       40.7
2021    9      162.8
2022    7       18.4
2023    9       81.9

So, why does this work? First, the overall trend has been up (although with some nasty tumbles). The moving average approach avoids a lot of the downside falls, although one is susceptible to upward blips in a down market.

Second, option returns are asymmetric. You can only lose 100% but can gain more than 100%. The highest return was over 10x.

DB2