Nvidia Bears Fan Hundreds of Millions of Dollars in Unusual Option Trades
$NVIDIA (NVDA.US)$ bears are fanning unusual option activities costing hundreds of millions of dollars as the stock price fluctuates less than a day after the AI chip giant reported its fiscal third quarter financial results.
The biggest of those unusual trades involved the sale of call options that give the holders the right to buy 12.3 million Nvidia shares at $135 by Dec. 20, exchange data compiled by moomoo showed. The seller collected a $165.4 million premium for those call options.
Nvidia shares rose as much as 4.8% to an intra-day record high of $152.89 before retreating to $143.88 by 12:57 p.m. in New York Thursday. While the AI giant exceeded analysts' estimates for earnings and every revenue segment, that wasn't enough for shares to hold on to gains.
The stock rally paused after 843% surge over the past two years. That steep climb came as the company's quarterly revenue grew almost six-fold to $35 billion in the three months ended Oct. 27, from the same quarter in 2022, boosted by the insatiable appetite for chips that power artificial intelligence (AI) applications.
Nvidia expects revenue to reach $37.5 billion, plus or minus 2% in the current quarter, according to its earnings release late Wednesday. That midpoint, which trailed analysts' estimates, represents about a 70% increase from a year earlier, the slowest growth April 2023. Revenue expansion peaked at 265% in the January quarter.
"Concern that Nvidia's 4Q sales forecast means slowing growth could be short-lived as focus shifts to an even stronger fiscal 2026, driven by the ramp up of its Blackwell chips," Kunjan Sobhani and Oscar Hernandez Tejada, analysts at Bloomberg Intelligence, said in a note Thursday.
The company forecast adjusted operating expenses to rise to $3.4 billion in the fourth quarter, from $2.21 billion a year earlier. That outlook is higher than the $3.34 billion expected by analysts, according to estimates compiled by Bloomberg. Expenses are rising amid higher compute, infrastructure and engineering development costs for new products, the company said in its earnings call with analysts.
"Gross margin will likely persist through the first half but we think margins will quickly rebound start in the third quarter," the Bloomberg Intelligence analysts said in a note.
Share your thoughts on Nvidia in the comments section. Do you the stock to resume its record-breaking rally?
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request. Moomoo does not guarantee favorable investment outcomes. The past performance of a security or financial product does not guarantee future results or returns. Customers should consider their investment objectives and risks carefully before investing in options. Because of the importance of tax considerations to all options transactions, the customer considering options should consult their tax advisor as to how taxes affect the outcome of each options strategy. All company analysis information is provided by third parties and not by Moomoo Financial Inc. Any illustrations, scenarios, or specific securities referenced herein are strictly for informational purposes and is not a recommendation. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
5790Followers
16Following
16KVisitors
Follow
Leila Yang :
73372627 : I do not think the rally will stop. Could be a small ralenties due to the fact that they are allready far advanced then the colateral fields as networking and data centers. Developing theiers own AI proccesing servers will be an factor for the ralenty, but we have to understand that this it is a part of development and R&D, which will ask for more investments.
For the next 4 years this tendance will stay IMHO. Also Jensen stipulate once (I was present there) that the NVidia dominance is sure for the next 4 years. Only the stable Quantum could took the reign.
104247826 :![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
Derpy Trades : Those deep ITM short calls sound an awful lot like someone's exit liquidity - - taking profit on very profitable shares at a key resistance level PLUS pocketing premium. Smart Money 101
72053289 : They seem to be hitting all the numbers I don’t think they are over priced
frank Crane_3546 : The greed on Wall Street is unimaginable!