Analysts have been raising their revenue and price targets for Nvidia Inc. (NVDA) stock. However, NVDA has been flat since April 29, almost two and a half months ago. That makes shorting out-of-the-money (OTM) NVDA put options very worthwhile. This article will show why.
NVDA closed Friday, July 10, at $210.96, up from a recent low of $192.53 on June 26. But on April 29, it was at $209.25, so it's up less than 1% in the past 2+ months. That means it's trading water.
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NVDA stock - last 3 months - Barchart - July 10, 2026 Meanwhile, analysts have been raising their revenue forecasts for next year. That implies its free cash flow (FCF) generation will be higher.
As a result, using a conservative valuation, NVDA's price targets from the analyst community are now much higher. That is reflected in higher analyst price targets.
It also gives investors a great opportunity. They can sell out-of-the-money (OTM) puts repeatedly for one-month expiry periods. That way, they can keep earning a 2% monthly yield and also set a lower potential buy-in point.
Higher NVDA Price Targets
I discussed this in a June 12 Barchart article ("Analysts Keep Hiking Nvidia's Forecast Revenue and Price Targets - Is NVDA Too Cheap?").
For example, I showed that NVDA stock could be worth $309 per share based on an FCF estimate of $294 billion for 2027. I used a 53.3% FCF margin on the average analysts' $551.66 billion 2027 revenue forecast. In fact, the highest analyst revenue estimate is over $710 billion.
Today, analysts are now forecasting higher revenue at $555.51 billion for 2027, so the FCF estimate is $296 billion.
And using a 25.5x multiple (equal to a 3.92% FCF yield), that sets Nvidia's market value at $7,548 billion (i.e., $7.548 trillion). That is 47.7% higher than its present market cap of $5.11 trillion, according to Yahoo! Finance.
In other words, NVDA is worth 47.7% more:
$210.96 x 1.477 = $311.59
That's slightly higher than my prior $309 price target. Moreover, analysts also have similar price targets (PTs). For example, Yahoo! Finance reports that 61 analysts have an average PT of $301.62.
That's 42.9% over Friday's close and higher than the prior average of $298.42, as seen in my last Barchart article on Nvidia a month ago.
Similarly, Barchart's mean PT is $302.55, and AnaChart's PT is $298.20. So, on average, analyst survey price targets are $300.79, or +42.6% over last week's closing price.
The bottom line is that NVDA stock is now worth more than a month ago, but NVDA has been flat.
That makes it ideal for short-put players. They can reap the benefit of earning high put option yields and also setting a lower potential buy-in point.
Shorting OTM Puts Works
For example, last month in a June 12 Barchart article, I suggested shorting the July 10 $190 NVDA put for a $3.50 premium.
At the time, NVDA was at $204.87, so the put strike price was 7.23% lower, and the expiry period was 29 days away.
That gave an investor a 1.84% yield for the next month (i.e., $3.50/$190.00). NVDA closed at $210.96.
As a result, this play was successful. The put option expired worthless. So, the short-put investor kept all of the 1.84% yield without the option being exercised (i.e., the account assigned to buy shares at $190.00).
Now this play is worth repeating.
For example, the August 14 expiry put option period shows that a similar play offers a 2.0% yield. The $195.00 strike price put contract, which has a similar distance below the trading price (i.e., -7.57%), has a midpoint premium of $3.90.
That works out to a one-month yield of 2.0% (i.e., $3.90 / $195.00 = 0.020, or 2.0%).
NVDA puts expiring Aug. 14 - Barchart - As of July 10, 2026 This means that an investor who secures $19,500 with their brokerage firm (i.e., as collateral to buy 100 shares at $195), can enter a trading order to “Sell to Open” 1 put at $195.00. The account will then immediately receive $390.
Moreover, even if NVDA falls to $195.00, the account would have a lower buy-in, after it is assigned to buy shares at $195.00:
$195.00 - $3.90 = $191.10 breakeven point
That is even lower than the recent trough price of $192.53 (see above).
Expected Returns Shorting OTM NVDA Puts
Moreover, consider this. Over the past month, an investor would have made 1.84% and 2.0% in income from shorting OTM NVDA puts, or 3.84% total.
That is more than would have been made by buying NVDA a month ago at $204.87 and holding it at $210.96 today (i.e., 2.97%).
In fact, the expected return (ER), for six months, by repeating this short-put play is 11.52% (i.e., 3.84% x 3), and 23.04% for the next year. This assumes that an investor can keep making between 1.84% and 2.0% shorting one-put puts at 7.5% lower strike prices.
That is why some investors are more attracted to this play than just holding NVDA stock.
Downside Risks
Granted, there are downside risks. For example, the market could get nervous ahead of Nvidia's upcoming August 19 Q2 earnings release. That could push NVDA below the $191.10 breakeven point.
However, there are two mitigating points to consider. The table above shows that there is just a 23.7% chance of this happening (i.e., the delta ratio), based on prior variance.
Second, even if this happens, all is not lost. The worst that happens is that an investor now owns 100 shares with an average cost of $191.10. The investor can repeat the short-put play or even sell OTM calls to mitigate this unrealized loss.
Or the investor can just hold on. After all, the upside would be significant. For example, using my $311.59 price target, the expected return would be over 63% (i.e., $311.69/$191.10 -1).
The bottom line is that shorting NVDA puts, given the stock's flat trading, as well as its upside, is worthwhile.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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