3 stock splits are coming up that you need to know about, and one of them is the biggest stock split in history. The Chipotle stock split could be the biggest stock split in New York Stock Exchange (NYSE) history. The CMG stock split will be a 50 to 1 stock split, if approved by shareholders. This stock market news could have huge implications for Chipotle stock, and there could be opportunities to make millions of dollars on the CMG stock split. And Nvidia stock is another one to watch out for also. A possible Nvidia stock split might be announced soon, and if there is a NVDA stock split, it could be huge Nvidia stock news. That’s why I’m doing Nvidia stock analysis, and giving you my Nvidia stock prediction. My NVDA stock analysis today shows I’m not the only one with frothy Nvidia stock predictions. My NVDA stock prediction indicates a massive rally coming for Nvidia stock. And I have 2 other stock split 2024 stocks to watch in the stock market this week as well. I’ll also share the stock split meaning, and explain what is a stock split.
Millionaires will be made from these stock splits. Of course we’ve got to talk about Chipotle and Nvidia. But there are two other stocks that you need to know about that are splitting as well. We’re going to talk about what those three stocks are, how you can make money off of them. And for the beginners watching this, I’ll even explain what a stock split is, and why stocks generally rally during stock splits. For those of you who are new to this channel, my name is Stock Curry. I’m a former Merrill Lynch and Morgan Stanley investment banker, and I have over 25 years of trading experience. I have made a lot of money off of stock splits, and I plan to make a lot of money off of these stock splits as well.
First, let’s talk about what a stock split is and why you should care. A stock split is simply when a company splits their shares in order to make the share price cheaper than it currently is. When a stock’s share price is too high for a single share, it becomes a psychological barrier for retail investors to buy into the stock, since they usually don’t have enough money to buy a single share Therefore, doing a stock split will make the share price lower, which will make it more affordable to retail investors. In addition to Walmart, Amazon and Google are among the high profile companies that have split their stocks in recent years.
To explain this simply, let’s say a company has a share price of $100 per share and they decide to do a two for one stock split. You would now have two shares worth $50 each. It’s the same $100 value. since you have two shares worth $50. versus previously having one share worth $100. But what this does, is it makes the share price cheaper, allowing more people to buy the stock. And because more people are now able to buy the stock, that means there’s more buyers coming into the market, which in turn should push this share price higher. And this is exactly why stock splits very often will have the effect of causing a share price to go up. Because as the shares are cheaper, more retail investors are able to buy, and with more buyers, that pushes the share price higher. That’s why companies do stock splits.
To show you just how a share price can rise, let’s take a look at a previous Tesla share split. A few years ago, Tesla announced a stock split, and the share price rallied. Now what’s very interesting here, is when the stock actually split, the share price then fell before continuing higher later on. This rising of the stock price going into the stock split, and then falling after the stock split, is known as buy the hype, sell the news. In other words, you want to be a buyer of the stock during the hype cycle as everybody’s excited about the stock split. But then you actually want to sell the stock when it splits in what’s known as sell the news. That way you make money on the run up, and you’re able to sell near the top.
Now of course, we’re talking about trading stocks here. We’re not talking about long term holds. None of the stocks that I’m going to talk about today are we going to cover the long term hold possibilities for the stock. I am only looking at short term trades for this week.
The first stock split we need to talk about is ticker CMG. This is Chipotle, the restaurant brand. As you can see on this chart, Chipotle has been running up massively over the past couple of years. And it had a big gap up a couple of days ago when the stock split was initially announced. However, it is now come back down a little bit. And it does have some pretty strong support at $2,800. Now, $2,800 is a lot of money, and a lot of retail investors cannot afford a $2,800 stock. And that’s why Chipotle is doing a stock split. Chipotle’s board of directors approved a 50 for 1 split of its common stock, and if approved by shareholders, this would be one of the biggest stock splits in New York Stock Exchange history. Now, the stock split is still subject to shareholder approval, and the company intends to seek shareholder approval for the amendment at its upcoming annual meeting on June 6th. Shareholders are expected to approve that stock split, and if the approval does go through, then Chipotle shares are expected to begin trading on a post split basis at the market open on Wednesday, June 26th.
Now this stock split is a little bit unique. Normally when a company does a stock split, we only have about two weeks of time between the time the stock split is announced and the time the company actually does the stock split. However, in the case of Chipotle, because this is one of, if not the biggest, stock split in the history of the stock market, they are not giving us two weeks. They are giving us three months to prepare and trade this stock. This provides some huge opportunities to make money on Chipotle stock. So if Chipotle does do what most companies do prior to a stock split, which is run up massively, just how high could Chipotle stock run? Well, based upon some technical analysis and Fibonacci levels, Chipotle could hit $3,600 prior to the stock split at the end of June. That represents a 20% rise in the stock price from its current price.
Now if Chipotle were to do that, there are a couple of different ways that you can make money off of this stock split news. The first way is simply buy the stock. If you have the means, you can buy Chipotle shares and just enjoy that 20% ride up. Another way is you could sell put options on it, if you have enough money for 100 shares of a $3,000 stock. But for those of us who are, say, a bit more poor, there are some other ways that we can make money on this as well. And that is with call options. Now, because Chipotle is such an expensive stock, there aren’t a lot of people buying call options on the stock, which does make the bid-ask spreads a little bit high. However, there are a couple of strike prices during a couple of different months which have high enough open interest to make this trade a little bit more reasonable.
So the options that I personally like are the June 2024 monthly options. The strike prices that I like include the $3,500 strike, which is trading at around $20. Now, of course, that’s 100 shares. So you have to multiply times 100. This is going to cost you about $2,000 to buy one call option at $3,500 for June. If you don’t quite have that much money, I also like the $4,000 strike price, which is trading at around $5.75. And that would only cost you $575 for a single call option. Now, the downside to the June call options is that you might end up having to hold these right up till expiration. And in doing so, you’re going to end up with a lot of theta decay. That is, the value of your option is going to go down over time.
Now there is another option that I really like as well that will not be hit by theta decay nearly as much as the June options will be. Of course, they’re going to be a little bit more expensive, but it is a better option if you have the money. And that would be the January 2025 monthly options. And on this one, I like the $4,000 strike that’s trading at around $42 per contract. Now, this particular option would cost you $4,200 to buy a single call option, but the benefit of this is you’re not going to have the theta decay like you’re going to have on the June options. And if Chipotle stock does go up to $3,600 by June, those January call options should go up by about 200%. A 200% profit over the next three months is pretty darn good.
The other option that would probably go up and make money would be the June $3,500 call option. The $4,000 call option is a bit riskier. You would need a pretty significant and fast rise in the price of the stock. And if you do do the $4,000 June call option, that is one I would try to get rid of at least two weeks prior to the expiration date, because at that point two weeks out, the theta decay is going to hit really fast, and you’re going to end up losing money a lot faster. So the $4,000 June option is going to have to be a little bit of a shorter term trade for you. The June $3,500 call option you can hold till expiration, but you’re still going to lose quite a bit of money to theta decay. And the safest of all of them, the best one in my mind if you have the money, would be the January $4,000 call option, which should go up by 200% if Chipotle hits $3,600 by the end of June.
Now, let’s talk about the second stock that you need to know about that’s splitting. That is ticker ODFL, Old Dominion Freight Line. Old Dominion Freight Line is a trucking company that ships goods all over the United States, as well as into Canada and Mexico. And they just approved a two for one stock split of their common stock. Those additional shares will be distributed on March 27th. Now that stock split was announced back in February, and the stock has already run up 10% since the stock split was announced. So as a trade specifically for the stock split, this isn’t really the best option. However, I do have a good technical reason why you might want to consider buying this stock.
If you look at the chart, ODFL hit very strong resistance at $447. Should ODFL break above $447, it could have a massive rally. I believe ODFL could have risen much higher from the stock split news if it had not hit this resistance level, which is purely technical, and makes no sense from a fundamental standpoint. Once ODFL does break above this resistance level, it will be known as a 52 week high breakout. It is an extremely bullish technical play. And this one, in my mind, would be a great one to buy a call option for with a much shorter date should ODFL have a close above $447. I like buying the April 2024 call option, and the one I like the most is the $460 call option, which is currently trading at around $6.50. But by the time ODFL does rise, this will probably be closer to $10. However, I think this would be a great call option should ODFL break above $447.
The third company that announced a stock split already that you should know about is ticker TPL, Texas Pacific Land. Earlier this month, Texas Pacific Land Corporation approved a three for one stock split. The new shares will be distributed on March 26th, with trading of the company’s common stock to begin on a stock split adjusted basis on Wednesday, March 27th. Now, if you look at the chart, you can see it already had its major run up after the stock split was announced. However once the stock split does actually happen on Wednesday the 27th, I do believe this is one that’s going to have your typical pullback, just like we saw on that Tesla stock, and this might make for a really good 1 or 2 week trade. You might want to consider some put options starting on Wednesday on ticker TPL to make money off of the sell the news side of the buy the hype sell, the news stock split.
Now, if you do decide to play short term options this week for any stock, you need to be aware of something coming up on Friday. On Friday, March 29th, the stock market is closed for Good Friday. That means all weekly options this week are going to expire on Thursday, March 28th. so keep that in mind if you’re playing options this week. Options expire on Thursday, not Friday, because the market is closed on Friday. Also know that if you are buying options expiring next week, you will have three days of theta decay over the weekend because this is a three day weekend.
Now, there is one other stock that we need to talk about, and that is Nvidia. Nvidia has not yet announced a stock split, but they are expected to soon. And Nvidia has a very similar chart to Old Dominion, where Nvidia was coming up on some very strong resistance right around $920. However, Nvidia did have a close above $920 on Friday. This is very, very bullish. It is a 52 week high breakout, and I would expect Nvidia stock to continue to go up over the next 1 to 2 weeks. Now, if Nvidia does announce a stock split, I would expect it to go up even higher. However, there is a warning that I’m going to give you about Nvidia, and the warning is this: if you play Nvidia, it needs to be a short term trade, not a long term hold.
The valuation on Nvidia is horrible right now, rated an F on Seeking Alpha. Nvidia is currently trading at double its fair valuation. The fair valuation on Nvidia right now is right around $504 per share, and Nvidia is trading at $942 per share, nearly double its fair valuation. What that means is, over the long run, once AI hype goes away and stocks start to get back down to more normal valuations, I would expect Nvidia to fall back down to $500.
So while I’m extremely bullish on Nvidia over the next 1 to 2 weeks, you have to understand this is a short turn trade, not a long term hold. I don’t want you buying Nvidia for a short term rise, and then not selling it and taking profits, only for it to fall back down to $500. Now you’re down 50% on your stock and you have no idea what to do. Remember that no stock goes up in a straight line forever; stocks eventually have pullbacks. And Nvidia is not immune to a pullback either. Nvidia will have a pullback eventually. Although, trying to time that is nearly impossible. But what I can tell you is that at least in the short term, over the next week or two, Nvidia stock is very bullish, and I do not see any pullbacks happening anytime before the end of the next two weeks. So those are the stocks that I have for you.
Now if you want to learn more about stock splits and why they rise, if you want to learn how to make money off of them, if you want to find your own stock splits, or you want to know when is the best time to buy, when is the best time to sell, and even how to trade options on them, I recommend you go take my course, where I am putting together an entire course to teach you how to trade in the stock market, how to do your own technical analysis, how to trade options. That full course is still being built out, but right now you can get a special discount on the course through the April 1st Easter day. And with that discount, you’re going to save $50. It’s going to bring the course down to its lowest price it’s ever been at. And this is probably going to be the lowest price it will ever be at, because once the course is in fact completed, I will raise the price of the course. But for right now, while it’s still being built out, you get a huge discount on the course. So make sure you take advantage of that before prices go up. Get the sale price. Get the lowest price that’s ever been out.