There is a group of investors who, for whatever reason, dislike buying high-priced stocks. Google the words “high-priced stocks,” and you get thousands of articles on the subject, some for and some against.
A 2023 article from Charles Schwab discussed this very subject.
“[M]ost market strategists agree, you don’t necessarily need 10 or even 100 shares to see potential results—it depends on how the stock moves. Some stocks are more volatile than others. An active, expensive stock might clock a higher overall percentage gain than lower-priced stocks, regardless of the quantity,” the February 2023 article stated.
It goes on to suggest that using options for leverage allows you to buy expensive stocks you thought were out of the reach of your meager financial resources.
Read on, and I’ll explain how you can buy 100 shares of a trendy and growing AI stock that most investors want in their long-term investment portfolios.
24/7 Wall Street Insights
- Investors who don’t like high-priced stocks will want to use options to buy this AI stock.
- Nvidia (NVDA) split its stock 10-for-1 in June.
- It has a CEO who is the best in the business.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
The AI Stock in Question
Nvidia (NASDAQ:NVDA) is no longer considered a high-priced stock after the AI stock corrected in recent days — it’s down nearly 12% in the past week — and, more importantly, split its stock on a 10-for-1 basis in June, with investors receiving nine new shares for each share already held.
Most companies split their stock to enable smaller investors to buy shares. Nvidia is no different. Its Q1 2025 earnings press release said, “NVIDIA also announced a ten-for-one forward stock split of NVIDIA’s issued common stock to make stock ownership more accessible to employees and investors.”
However, the advent of fractional shares does the same thing by allowing investors to buy less than a single share of stock. For example, Nvidia currently trades around $110.50. In many cases, online brokers offering fractional share trading will allow purchases as low as $1. That’s less than 1% of Nvidia’s share price.
Regardless of your reasons for wanting to buy this AI stock for less — in this case, $500 — Schwab rightly pointed out that options can help you accomplish your goal, albeit only temporarily.
Before I get into the specifics, let’s consider three reasons why someone would want to own Nvidia stock in the first place.
Three Reasons to Own
The first reason to own NVDA is its position within the ever-expanding field of artificial intelligence, or A,I as it’s better known.
Goldman Sachs estimated in August 2023 that the global investment in AI could reach $200 billion annually by 2025. More importantly, that’s before AI becomes more integrated into our daily lives. As a result, the $200 billion is likely just the tip of the iceberg.
“Over the longer-term, AI-related investment could peak as high as 2.5 to 4% of GDP in the U.S. and 1.5 to 2.5% of GDP in other major AI leaders, if Goldman Sachs Research’s AI growth projections are fully realized,” Goldman Sachs’ analysts wrote.
As the world’s leading producer of high-performance computer chips such as Blackwell, it has positioned itself to benefit from this growth. While there might be competition out there, Nvidia remains the king of the castle.
The second reason for owning Nvidia stock is its profitability and cash flow.
In the six months ended July 28th, the company earned $31.48 billion, up considerably from 8.23 billion a year earlier. Its free cash flow through the first two quarters of fiscal 2025 (January year-end) was $28.42 billion, up more than three-fold from the same period in fiscal 2024. That’s a free cash flow margin of 50.7% on $56.08 billion in revenue, up 930 basis points from a year earlier.
What’s not to like?
Lastly, it has one of the best CEOs in America in, Jensen Huang, one of its co-founders.
Tech investor Gavin Baker, the chief investment officer of Atreides Management—its latest 13F is slightly over $3 billion—recently praised Huang and Tesla (NASDAQ:TSLA) as the best leaders he has seen.
“Elon [Musk] and Jensen are, for sure, the two best CEOs I’ve ever seen, with Lisa Su right behind them at [Advanced Micro Devices],” MarketWatch reported the CIO’s comments from his appearance on the Invest Like the Best podcast.
There’s a lot to like about Nvidia.
How to Buy 100 Nvidia Shares for $500
Options is the answer, albeit with a catch.
Investors use options for leverage. With the purchase of one call contract, for example, you are buying the right, but not the obligation, to purchase 100 shares of its stock at the strike price specified in the future. Often, you can secure this right for pennies on the dollar.
Here is a specific example of an existing Nvidia call option that could set you up to buy 100 shares of its stock for just $500 down.
| Strike | Moneyness | Bid | Mid | Ask | Last | Change | %Chg | Volume | Open Int |
| 142.00 | -28.75% | 5.00 | 5.03 | 5.05 | 4.98 | -2.80 | -35.99% | 1,200 | 5,254 |
Source: Barchart.com
As I write this on Sept. 3, the $142 call expiring on Jan. 17/2025, has an ask price of $5.05, or $505 ($5.05 times 100 shares). That’s a 3.6% down payment on its $142 strike price. Worst case, Jan. 17 rolls around, and NVDA shares are nowhere near $142, so you don’t exercise your right to buy 100 shares of its stock. You forfeit the $505.
However, because the expiration date is 136 days, there is plenty of time for you to still get your money back.
How so? By selling your calls before expiration.
The delta is 0.27630, which means if the share price increases by $18.28 (16.9%) before expiry, you can sell them and double your money. While you don’t get the shares, you put some income in your pocket.
This enables you to secure the right to buy 100 Nvidia shares for just $505. It’s a catch, mind you, but one that professional investors use to take positions in companies they want to own for the long haul.
Leverage can be a good thing when used judiciously. As with every investment, investors should do their due diligence about the stocks they buy and how they buy them, including options.
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