Chip stocks, including Nvidia, took investors on a wild ride to the upside on Monday, sparking discussions among traders. Jared Levy, the Chief Market Strategist at Peak American Financial, weighed in on the market dynamics and shared his three keys to trading during volatile weeks. However, Jared’s main focus for the day was Dave and Buster’s (PLAY). Once trading at $100, the stock has dropped to $30, leading Jared to take a “gamey” approach. With lots of short interest and an earnings report on the horizon, he sees potential for a sympathy rally if the company delivers even a small bit of good news.
Here’s how Jared is playing it: He owns the stock at around $30 a share and is executing a collar trade. He’s buying a September 24th expiration 30 put and selling a September expiration 35 call. If Dave and Buster’s rallies, Jared profits. If not, his losses are limited to the cost of the trade, which is about $1 per share.
Jared’s strategy is built on minimizing downside risk while remaining poised for an upside surprise. It’s not a long-term play, as he doesn’t fully believe in the company, but he’s banking on a short-term rally fueled by earnings.
As the week unfolds, Jared remains watchful of market movements, particularly leading up to the Fed meeting. He urges traders to be cautious, follow data-driven strategies, and stay sharp in this volatile environment.
CLICK HERE to watch Jared Levy on Business First AM covering his creative Dave and Buster’s (Play) trade.
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