Managing NVDA Credit Spreads During a Tech Sell-Off

As of February 6, 2026, our options income portfolio increased by +0.51%, closing at $11,106.

While the portfolio posted a modest gain, the broader market environment was anything but calm. Technology stocks came under heavy pressure, cryptocurrencies experienced another sharp decline, and volatility returned across multiple asset classes.

The experience reinforced an important lesson that applies to both stocks and options trading:

Avoid excessive leverage whenever possible.

During the same week, our separate Ethereum strategy suffered a significant drawdown, eventually forcing us to exit leveraged positions. While painful, it served as another reminder that preserving capital is often more important than maximizing returns.

Actively Managing NVDA Credit Spreads

Unlike the relatively quiet weeks before, this week required active management.

NVDA experienced substantial volatility as investors reacted to the broader technology sell-off and began positioning ahead of the company's upcoming earnings release.

Rather than opening aggressive new trades, I focused on managing existing positions.

During the week, I rolled our NVDA put spreads twice:

First, by rolling the 177.5 strike lower and further out in time.
Then by adjusting again to the 170 strike with a February 27 expiration.

The objective was straightforward: improve the probability of success while collecting additional premium whenever possible.

This is one of the reasons I prefer defined-risk credit spreads over more aggressive strategies. Adjustments are usually available, and risk remains manageable throughout the process.

If you're unfamiliar with this approach, see:

Preparing for NVDA Earnings

At the time, NVIDIA earnings were only a few weeks away.

Earnings events often create elevated implied volatility, wider price swings, and significantly higher uncertainty.

Because of this, I decided not to add additional trades until existing positions were under control.

This likely meant lower premium generation for the month, but protecting capital remains more important than maximizing short-term income.

One of the easiest mistakes options traders make is increasing risk simply because they feel they need to generate more premium.

Patience is often the better trade.

Portfolio Performance

Despite the challenging market environment, the portfolio remained ahead of major benchmarks.

Portfolio: +5.08% YTD
S&P 500: +0.68% YTD
NVDA: -2.08% YTD

While short-term performance is always interesting, the primary objective remains consistent: generate options income while gradually building a portfolio of productive assets.

The McDonald's Investing Tradition

Outside of options trading, we have a small family investing tradition.

Whenever our daughter has a McDonald's meal, we buy 0.1 shares of MCD.

The visits are intentionally limited, but after roughly two years of following this habit, the portfolio has grown to approximately four shares of McDonald's stock.

More importantly, it has become a simple way to teach investing concepts in the real world.

Instead of being only a customer, she also becomes a small shareholder.

The financial impact is modest, but the educational value is significant.

Current Options Positions

NVDA Feb 27, 2026 170/150 Bull Put Credit Spread
2x BMY Mar 20, 2026 50/46 Bull Put Credit Spread
Shell Feb 20, 2026 29 Cash-Secured Put
NVDA Jun 18, 2026 $116 Covered Call

Most of the portfolio's premium generation remained concentrated in NVIDIA, while the Shell and Bristol Myers positions provided diversification and additional income opportunities.

For investors comparing different income strategies, see:

Options Premium and Margin Debt

This week generated $94 in options premium.

At the current margin balance of approximately -$3,922, maintaining a similar pace would theoretically require around 41 weeks to eliminate the debt completely.

Whether that happens during 2026 remains uncertain, but the objective is unchanged:

Gradually reduce margin debt
Maintain a core holding of 100 NVDA shares
Avoid taking excessive risk simply to accelerate the process

I discuss realistic premium expectations in more detail here:

Can You Really Earn $100 Per Week Selling Options?

What I'm Watching Next

The key position going into next week remains:

NVDA Feb 27, 2026 170/150 Bull Put Credit Spread

Friday's rebound above $184 was encouraging and reduced immediate pressure on the position.

However, with earnings approaching, volatility is likely to remain elevated.

If the position becomes challenged again, the plan remains unchanged:

Evaluate the probability of recovery
Roll when appropriate
Prefer collecting additional credit
Focus on portfolio stability over short-term perfection

Key Takeaway

This week demonstrated why trade management matters as much as trade selection.

Strong rallies and sharp sell-offs are inevitable. The difference between successful options traders and struggling ones often comes down to how they respond when positions come under pressure.

Rather than chasing additional trades during a volatile market, I focused on adjusting existing positions, reducing risk, and preserving flexibility ahead of NVDA earnings.

Sometimes the best trade is simply managing the trades you already have.

Disclaimer

This article is provided for educational and informational purposes only and should not be considered investment advice. Options trading involves risk and may not be suitable for all investors. Past performance does not guarantee future results.