NVDA Free Cash Flow TTM data by YCharts
Technically, there isn't much not to like on Nvidia's chart. All the important widely followed moving averages are trending higher, and the shares are near the highs for 2013. The one year return is 10%, and if the earnings numbers are well received by investors, Nvidia is set to break out above the 52-week high of $15.22. The shares are also closing in on $14.27, the analyst average price target.
Nvidia becomes even more attractive after considering the 30 cents a year in dividends shareholders are receiving. The yield is about 2.2%.
Short interest above 5% is not enough to sound the alarms, but above 6%, it increases my hesitation for allocating capital in the company. Short-sellers are among the brightest and most informed market participants, and if they turn sour on a company, you can bet it's for a good reason.
If the short interest ascends above 6%, you may wish to investigate why short-sellers believe the shares will move lower. Otherwise, the prevailing 5.2% of the float short isn't low or high but right on the fence for concern.
Option premium is sky high as expected for a tech company in front of earnings. If you're not sure you want the full exposure of Thursday's earnings and you own shares, you can sell covered calls to hedge. Selling covered calls will not provide full cover like buying put options can, but you get to earn instead of pay for time premium if you sell covered calls.
NVDA Revenue Quarterly
At the time of publication, the author had no positions in stocks mentioned
This article was written by an independent contributor, separate from TheStreet's regular news coverage.