I collected USD 921 in premium when I sold a Nvidia put option in October 2026. A little over a month later, that same position was showing an unrealised loss of USD 1,901.73.
Nvidia had reached a record intraday high of USD 243.37 on 6 October 2026. By 11 November, its share price had fallen to USD 173.73, a decline of almost 29%. For investors watching from the sidelines, a drop like this might look like a buying opportunity. After all, Nvidia is one of the biggest names in artificial intelligence. Surely buying it at a 29% discount is better than buying it at its peak?
Maybe. But a stock that has already fallen 29% can still fall another 20%, or even more.
I’ve been investing in individual stocks, ETFs and options for some time, and I’ve learned that buying the dip isn’t always as straightforward as it sounds. It’s also a different decision for me now. Since leaving my full-time job in September 2026, I no longer have a regular paycheck to replenish my investment account if things go wrong.
So before putting more money into a falling stock, these are five things I think are worth checking.
1. Why Is the Stock Falling?
The first thing I want to understand is whether the decline is caused by the overall market or something happening within the company.
When the entire market sells off, even financially strong businesses can see their share prices fall. Investors might be worried about interest rates, economic growth or simply taking profits. But when a particular company falls much harder than its competitors, I pay closer attention.
Nvidia is a good example. Its recent decline started amid concerns about expensive AI stocks and whether companies could continue spending heavily on data centres. Then came company-specific news, including reports of an independent board investigation involving CEO Jensen Huang and questions about his future leadership.
That’s a different situation from a stock falling simply because the market is having a bad week. A broad market sell-off might create opportunities to buy fundamentally strong companies at lower prices, but company-specific problems require a closer look.
For me, the important questions are whether the problem is temporary and whether it could affect the company’s future earnings. Have analysts reduced their expectations? Are competitors performing better? Is there an upcoming earnings announcement that could change the picture?
A strong business can recover from bad news, but not every problem disappears just because its share price has fallen enough.
2. Is the Stock Actually Cheap?
One mistake investors can make is comparing today’s share price with its previous high. If a stock falls from USD 240 to USD 170, it certainly looks cheaper. But cheaper doesn’t necessarily mean good value.
One way to assess valuation is through the price-to-earnings ratio, or P/E ratio. Put simply, a P/E ratio of 20 means investors are paying USD 20 for every USD 1 of annual company earnings.
Here’s how Nvidia’s valuation looked using the figures in my research as of 11 November 2026.
| Metric | Nvidia |
|---|---|
| Share price | USD 173.73 |
| Earnings per share (last four quarters) | USD 7.91 |
| Trailing P/E | Approximately 22 |
| Forward P/E | Approximately 14 |
Source: StockAnalysis, checked 12 November 2026. Forward estimates can vary between providers.
The difference between trailing and forward P/E is important. Trailing P/E uses earnings the company has already reported, while forward P/E uses estimates of what analysts expect it to earn.
A forward P/E of 14 might look attractive for a fast-growing company, but that valuation depends on future earnings meeting expectations. If growth slows or analysts reduce their forecasts, the stock might not be as cheap as it first appears.
That’s why I wouldn’t buy a stock based on its percentage decline alone. I’d also want to compare its valuation with previous years, look at earnings growth and understand what could change the company’s outlook.
3. How Much of the Stock Do I Already Own?
Here’s something that’s easy to overlook. You might already own Nvidia without holding a single Nvidia share.
If you invest in ETFs tracking the S&P 500 or global stock markets, there’s a good chance Nvidia is among their holdings. That’s the case for me.
I previously bought Nvidia shares in several small batches between February and April 2026, before selling them in June and July. Although I don’t currently hold Nvidia shares directly, I still have exposure through my ETFs.
Two of my ETF holdings are CSPX, which tracks the S&P 500, and VALU, which tracks the FTSE Global All Cap Index.
Here’s how these investments were performing as of 11 November 2026.
| ETF | Unrealised Gain/Loss |
|---|---|
| CSPX (S&P 500 ETF) | +33.29% |
| VALU (Global All-Cap ETF) | −1.27% |
Both funds hold Nvidia, although the company’s weighting differs between them. This means Nvidia’s share price movements already affect my portfolio, even without owning the stock directly. Buying Nvidia shares now would increase my exposure to a company I already own indirectly.
The same applies to other large technology companies such as Apple, Microsoft and Amazon. You might own several different ETFs and think you’re well diversified, only to discover that many of them invest heavily in the same companies.
That’s why I think it’s worth checking the underlying holdings of your ETFs before adding more individual stocks. The number of funds you own doesn’t always tell you how diversified your portfolio really is.
I’ve shared more about my experience investing in CSPX and how it has performed since I bought it.
4. What Happens If the Stock Falls Another 20%?
This is probably the question I consider most carefully. When a stock has already fallen significantly, it’s tempting to think the worst must be over. But markets don’t work that way.
Imagine investing USD 10,000 in a stock. If its price falls by 20%, your investment is now worth USD 8,000. If it falls another 20%, you’re left with USD 6,400.
| Scenario (Hypothetical) | Investment Value |
|---|---|
| Initial investment | USD 10,000 |
| After a 20% decline | USD 8,000 |
| After another 20% decline | USD 6,400 |
| Total loss | −36% |
Two consecutive declines of 20% result in a total loss of 36%. To recover from USD 6,400 to USD 10,000, your investment would need to gain 56.25%. And there’s no guarantee that recovery will happen quickly.
This is why position sizing matters. Before buying more of a falling stock, I think it’s worth considering how much you can afford to lose or have tied up for years, especially if that money might be needed for living expenses.
My Nvidia Put Options Are a Real Example
I currently have two open Nvidia put options.
For readers unfamiliar with options, selling a put means receiving a premium in exchange for taking on an obligation to buy shares at an agreed price if assigned. One standard US stock option contract typically represents 100 shares.
Here are my positions as of 11 November 2026.
| Put 1 | Put 2 | |
|---|---|---|
| Strike price | USD 155 | USD 180 |
| Expiry | 24 Dec 2026 | 17 Sep 2027 |
| Date sold | 9 Nov 2026 | 5 Oct 2026 |
| Premium collected | USD 511 | USD 921 |
| Unrealised P/L | +USD 4.86 | −USD 1,901.73 |
| Purchase obligation if assigned | USD 15,500 | USD 18,000 |
My USD 180 put was sold on 5 October, when Nvidia closed at USD 238.90. At the time, the strike price was well below the market price, giving the stock quite a bit of room to fall before the option moved into the money.
But that cushion disappeared much faster than expected.
Although I collected USD 921 in premium, the position was showing an unrealised loss of USD 1,901.73 as of 11 November. The loss isn’t realised because the option remains open, but it reflects how much the position’s value has moved against me.
My second put was sold on 9 November, after Nvidia had already experienced a substantial decline. This one has a strike price of USD 155 and expires on 24 December 2026. I collected USD 511 in premium, and as of 11 November, it was showing a small unrealised gain of USD 4.86.
Both positions are still open, so neither result is final.
Now, suppose Nvidia falls another 20% from USD 173.73 to approximately USD 138.98 and remains at that price when my USD 180 put expires.
If assigned, I would have to buy 100 shares for USD 18,000. Those shares would be worth approximately USD 13,898 at that market price. After accounting for the USD 921 premium collected, the loss would be approximately USD 3,181 before fees.
That’s a hypothetical scenario, not a prediction.
If both of my puts are assigned, I could be required to purchase 200 Nvidia shares for a combined USD 33,500. And if Nvidia continues falling after assignment, I would bear those additional losses as a shareholder.
Selling puts can generate income, but the premium doesn’t protect you from a large decline in the underlying stock. I’ve experienced options assignment before, which I shared in my article about my TE puts being assigned early.
For me, the important question isn’t simply how much premium I can collect. It’s whether I’m comfortable owning the shares at the agreed price if the market moves against me.
5. Do I Have a Plan, or Am I Just Afraid of Missing Out?
Sometimes the hardest part of investing is watching a stock recover after deciding not to buy. Nobody likes missing an opportunity, especially when a stock you’ve been watching suddenly becomes much cheaper.
But buying simply because a share price has dropped can be just as risky as chasing a stock at its peak.
There are several ways to approach a market decline, and each comes with its own trade-offs.
| Approach | Advantage | Disadvantage |
|---|---|---|
| Lump sum investing | Benefits fully from a quick recovery | Greater immediate exposure if prices keep falling |
| Buying in stages | Spreads purchases across different prices | May miss some gains during a quick rebound |
| Regular ETF investing | Diversifies company-specific risk | Still exposed to wider market declines |
I’ve used staged buying before, including when I purchased Nvidia shares earlier this year. Rather than committing all my capital at once, I spread my purchases over several months.
This time, I haven’t bought any Nvidia shares directly during the decline. Instead, I sold another put at the USD 155 strike price.
That doesn’t mean I’ve avoided the risk. It simply means I’ve taken on a different kind of exposure, with an obligation to buy shares if assigned.
Before making another investment, I want to know how much capital I’m prepared to commit, what happens if the stock falls further, and whether the investment still fits my overall portfolio. Without a regular salary, managing available cash has become especially important.
For anyone considering buying the dip, I think it helps to decide on a maximum amount you’re willing to invest before making the first purchase. You can then consider whether to invest all at once, buy in stages or wait until you have a clearer picture of the company’s outlook.
I’ve also compared the advantages and disadvantages of dollar-cost averaging versus lump sum investing.
So, Should You Buy the Dip?
I don’t think there’s a simple answer. A falling share price can create opportunities, but it can also be a warning that something has changed.
Before buying, I’d want to understand why the stock fell, whether its valuation makes sense, how much exposure I already have and whether I can afford to hold it through another significant decline.
Looking at my Nvidia positions, I’m reminded that a lower share price doesn’t automatically mean lower risk. My USD 180 put looked comfortably out of the money when I sold it in October. Just over a month later, the situation looks very different.
I’m still holding both put positions as of 11 November, and I haven’t added Nvidia shares directly. Whether that turns out to be the right decision remains to be seen.
For now, I’m more interested in managing the positions I already have than trying to predict where Nvidia will bottom.
Are you buying Nvidia after its recent decline, or waiting to see what happens next?
Disclaimer: This article shares my personal investing experience for educational purposes only. It is not financial advice. All investments involve risk, including the potential loss of capital.
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