Forget AMC. Two traders share their high-risk, high-reward stock bets


Meme shares are coming off a wild week.

AMC Entertainment, one of the actively traded shares, ended Friday up greater than 80% for the week even because the company warned investors of the risks.

For those that had gotten in on the lows in January, they’d be up greater than 2,000%. But, AMC remains to be thought-about extremely speculative and there are different high-risk, high-reward shares that deserve consideration, based on two traders.

Speaking to CNBC’s “Trading Nation” on Friday, Simpler Trading director of choices Danielle Shay highlighted chipmaker Nvidia as one identify of curiosity.

“It is at the all-time highs and normally I would never come here and say, ‘Hey guys, look at Nvidia, it’s at all-time highs, it’s a great time to buy it.’ But the reason why I like this and I put it in that momentum retail-trader category is because of the stock split coming up,” Shay stated. “Last year, what we saw with Apple and Tesla both, when their stock splits were announced, we had a massive rally that was largely due to the retail crowd.”

Nvidia’s board in May accepted a 4-for-1 stock cut up, set to enter impact July 20. In the times after Apple’s stock cut up final August, shares surged by as a lot as 7%.  

Nvidia is “a solid company, great fundamentals. Technicals, it’s at the highs, but I’m looking at this to go potentially up to $750, maybe even $800, because if you look at it right now, it has this massive momentum because of the stock split,” stated Shay. “I’m trading this in the options market with a low-risk, high-reward butterfly targeting that $750 price point in the next two weeks.”

A transfer to $750 implies practically 7% upside. Shay’s larger goal, $800, would imply a 14% rally from Friday’s shut of $703.

Craig Johnson, chief market technician at Piper Sandler, named Plug Power as his high-risk, high-reward choose. The stock closed Friday at $30.58.

“This is a stock that, coming off the March lows, has risen almost 3,000%. It’s corrected 75% off the highs we had seen just a couple months ago in February, and now technically, we’ve just reversed the downtrend … and moved above our 50- and 200-day moving averages,” Johnson stated throughout the identical interview.

He added that the rationale this identify matches into his “high-risk category” is as a result of the stock group Plug Power belongs to appears to be like to be dropping momentum.

“When I go back and I look at some of our longer-term group work that we do at Piper Sandler, I have noticed that when we’ve seen 26-week momentum spikes in the overall industry group in which Plug Power fits into — we saw it in 2000 we also saw it in 2013 and we just saw it again — usually these stocks have to correct for the better part of 24 to 36 months,” stated Johnson.

He sees 125% upside for Plug and solely roughly 29% draw back to get again to its downtrend resistance degree.

Disclosure: Shay holds NVDA.

Disclaimer

Leave a Reply

Your email address will not be published. Required fields are marked *