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Barchart
Mark R. Hake, CFA

Nvidia Stock Still Looks Undervalued - Good for Investors Who Sell Short OTM Puts for Income

Nvidia OTM NVDA

Nvidia Inc. (NVDA) stock still looks undervalued after its pullback based on its strong free cash flow and FCF margins. This is good news for investors shorting out-of-the-money (OTM) puts for income and lower buy points.

To short an OTM put means entering an order to “Sell to Open” a put option at a strike price below the existing spot price. Although you keep the premium as immediate income, you must first secure the cash to buy the stock at this strike price with your brokerage firm. 

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