Nvidia or Russell 2000? Plus, Earnings for the week.
Nvidia or Russell 2000? Plus, Earnings for the week.
Yes, the $4 trillion valuation of Nvidia equals all of the 2,000 small-cap stocks. So, what’s next?
Which one would you choose?
Each is roughly $4 trillion:
Choice A - Buy all 2,000 small-capitalization stocks in the Russell 2000
Choice B - Go all-in on just one stock: Nvidia (NVDA)
There’s obviously greater diversification in the Russell 2000, yet the expected outcome of making 50% (moving from $4 trillion to $6 trillion) by the end of the year is much greater in Nvidia. Looking at the chains at the end of December 2025, the probability of having $6 trillion by year-end is about 40%. BUT in the Russell 2000, the probability is much smaller at 20%.
Formulating your investment strategy in this way is helpful. There is no right answer — only different expectations and different risks.
Russell 2000 — What dat? What are we trading?
The Russell 2000 is small caps — we use IWM (iShares Russell 2000 ETF) to trade it using equities. Because we love data at tastytrade, we decided to dig into it this index deeper.
Nearly 40% of the Russell 2000 is comprised of small-cap healthcare and financial stocks. In particular, regional banks and biotechs are the largest industries.
That explains why the implied volatility is 25% compared to 16% in the S&P 500. On a typical day, the Russell 2000 will move more than the S&P 500.
Upcoming Earnings
($250 million traded/day)
The biggest names from the list below are Tesla (TSLA), Alphabet (GOOGL/GOOG), Visa (V), Texas Instruments (TXN), Intel (INTC), Procter & Gamble (PG), Boeing (BA), IBM (IBM) and General Motors (GM).
Here is the full list:
Tuesday, July 22
Morning: KO, DHR, RTX, PM, DHI, SHW, LMT, GM, MSCI, KEY, THC, NOC, IVZ, PCAR, IQV, EFX, HAL, DGX, SYF, PNR
Evening: TXN, ISRG, EQT, COF, CB, BKR, ENPH, SAP
Wednesday, July 23
Morning: GEV, TMO, T, FI, APH, NEE, HLT, BSX, CME, FCX, TDY, MCO, TEL, COOP, GD
Evening: TSLA, GOOGL, GOOG, QS, NOW, TMUS, IBM, CMG, URI, ORLY, MOH, CSX, LUV, ICLR, CCI, LVS
Thursday, July 24
Morning: HON, UNP, AAL, BX, KDP, VLO, TRU, TSCO
Evening: INTC, NEM, DECK, DLR
Friday, July 25
Morning: CNC, CHTR, HCA, AON, PSX
Monday, July 28
Evening: CLS, CDNS, WM
Tuesday, July 29
Morning: UNH, SOFI, PG, BA, MRK, SPOT, PYPL, RCL, NSC, STLA, UPS, CARR, AMT, JCI
Evening: V, BKNG, MARA, SBUX, EXE, STX, MDLZ, EA, TER, RSG
Two Trade Ideas
IWM ($222.13) iron fly (AUG) $6.79 credit
The small cap index is the highest volatility index on the board and still below highs, unlike SPY, QQQ and DIA. The 200-day moving average sits at around 215; if you think it might chop around, an iron fly plays into the high volatility and sideways movement. Short the 220/205 put spread and the 225/240 call spread trades at $6.79 with $10 in theta decay.
SHOP ($124.09) call ratio psread (AUG) $1.46 credit
Volatility is slim pickings in the market at the moment, outside of stocks reporting earnings in the next couple weeks. SHOP has rallied to near highs and if you think it might stall but don't want the downside risk, a call ratio spread plays into a sideways/up move with no risk to the downside. Long the 130 call and short 1x the 135 and 140 calls trades at $1.46 using around $1,400 in buying power.
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Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He’s known best for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat
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