Nvidia's Share Slump Lures Bargain Hunters Taking Bullish Options Position in Chipmaker
There's no shortage of Nvidia ( $NVDA.US$) bulls even after the chipmaker's shares tumbled below $100 for the first time since May.
More than 87,000 call options giving the holder the right to buy Nvidia at $100 by the end of this week changed hands by noon time in New York Monday. That jump in trading took volume to almost 14-times the open interest, signaling investors and speculators could be placing new bullish positions.
More than 87,000 call options giving the holder the right to buy Nvidia at $100 by the end of this week changed hands by noon time in New York Monday. That jump in trading took volume to almost 14-times the open interest, signaling investors and speculators could be placing new bullish positions.
(To see Nvidia's options chain, click here.)
Nvidia shares tumbled as much as 15% early Monday to $90.69, the lowest since mid-May amid a global market rout that was fueled by mounting fears of a U.S. recession and speculation that the yen carry-trade could be unwinding. The carry trade involves borrowing a cheaper currency at a low interest rate and investing that money in another country like the U.S.
Speculation that the yen carry trade could unwind were fueled by Bank of Japan's decision to raise interest rates last week, curbing the differential between that Asian country and the U.S.
Speculation that the yen carry trade could unwind were fueled by Bank of Japan's decision to raise interest rates last week, curbing the differential between that Asian country and the U.S.
Another headwind for the stock could be the potential delay in the company's Blackwell artificial intelligence (AI) chips by at least three months that could affect customers including Meta Platforms ( $META.US$), Microsoft ( $MSFT.US$) and Alphabet ( $GOOGL.US$, $GOOG.US$ ), which ordered tens of billions worth of the chips, the Information reported late Friday.
(To see the options market page, click here.)
But as Nvidia shares fell below $100 Monday morning, investors and speculators started snapping up call options at that strike price. As a result, the price of the $100 calls, which fell more than 75% in early trading, pared those declines to just 47% by 11:42 a.m. in New York.
Goldman Sachs analysts expect little to no impact from the Blackwell delay to Nvidia's 2025 earnings and its competitive standing in AI chips, investing.com reported.
Both the technical indicators and capital trend data tracked by moomoo signal a positive turn for the stock that has fallen from a record $140.76 in June.
Inflows into Nvidia outpaced outflows by $1.12 billion, more than half of which came from small orders, data showed. That trimmed this month's net outflow to $1.77 billion. Of the 15 technical indicators, nine signal the stock may be oversold and the trend could be turning bullish.
Financial institutions are also taking bullish option positions in Nvidia. The biggest of them involves a seller writing put options that gives the holder the right to sell 800,0000 shares at $90 in 18 days. Those put options, which were sold at $5.20, now trade at $2.96, making it cheaper for the seller to buy it back, should that person or entity decide to book the profits.
The price of the puts, which soared more than 300% earlier, trimmed those gains to 69% as the stock trade farther above that strike price. That can it more advantageous for holders to directly sell the stock at its current price of more than $101, than exercise the option at the strike price of $90.
The price of the puts, which soared more than 300% earlier, trimmed those gains to 69% as the stock trade farther above that strike price. That can it more advantageous for holders to directly sell the stock at its current price of more than $101, than exercise the option at the strike price of $90.
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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.
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.
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Former editor at Bloomberg, then Lazard Asset Management. Posts aren’t investment advice. Views are just mine.
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Noah Johnson110 : Nice fastball to start the month
Clement Lemons : okk
Coyliss Fountano : August 28th will change the atmosphere for Nvidia
72600850 Coyliss Fountano : Why? I’m a new trader, could you explain please
ByUncle 72600850 : post market earning release
AdaT : Nice
BelleWeather : I purchased more Nvidia shares and calls today, myself!
A little confused by the description of writing those puts…