Options Sentiment Is Shifting Around Nvidia, Wu Silverman Says

Show Transcript
Bloomberg Jun 21 11:05 · 16.2k Views

Amy Wu Silverman of RBC Capital Markets says the options sentiment around Nvidia is shifting. She's on "Bloomberg Surveillance."

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more

Transcript

  • 00:00 How much is this something that signals to you
  • 00:02 that Nvidia's kind of run out of steam and how much it can just keep melting up in the FOMO trade?
  • 00:08 Good morning.
  • 00:09 You know, look,
  • 00:10 when I look at NVIDIA, when I look at, you know, the mag seven, it really is telling because I think
  • 00:16 on the surface everything looks fine, right?
  • 00:19 But when you kind of look at the option sentiment underneath,
  • 00:22 it's really a completely different story, Lisa, than it was the first few months of the year where the bullish option sentiment really matched that white tail exuberance.
  • 00:30 We saw.
  • 00:31 You know, people had benchmark FOMO.
  • 00:33 They really had to jump in the pool
  • 00:35 because NVIDIA was so much of a weight of the benchmark.
  • 00:37 But you're actually seeing the opposite happen right now.
  • 00:40 So you're seeing that put skew, you're seeing that demand for hedging
  • 00:43 actually tick up in a name like NVIDIA.
  • 00:45 And again, that's not true for everything.
  • 00:46 So it's not this holistic move,
  • 00:48 but you are seeing it specifically NVIDIA.
  • 00:50 And I do think underneath the surface that sentiment is shifting a little bit.
  • 00:54 This is fascinating at a time where, and this is something Emery pointed out, we hear inflection point from person after person after person throughout the morning.
  • 01:02 Are you seeing an inflection point in the way that people are arranging some of their hedges in terms of trying to hedge against downside risk in NVIDIA rather than
  • 01:11 say upside risk in the rest of the S&P 499 that haven't really caught up in the same way?
  • 01:19 Yeah, if I had to characterize it, I would say we're sort of at a pre inflection point in the sense that you see this right tail being sucked out of the market.
  • 01:28 That's very important.
  • 01:29 But you haven't really seen that left tail swing to all time highs.
  • 01:32 You know, we're nowhere near the expensiveness of levels we've seen in the past.
  • 01:37 So one thing I've been calling the summer is a do nothing summer.
  • 01:41 And what I mean by that is for a lot of these stocks, like an NVIDIA, like an Apple, like a Meta that I've done so well, something like call overriding, we're essentially saying I'm going to sell a little bit this upside, maybe I can use it to fund downside.
  • 01:54 You know, those are the compelling strategies for somewhere where seasonally it's lower volatility.
  • 01:58 But I don't think we've gotten to the point where people are capitulating.
  • 02:01 While you're saying the sentiment is declining in NVIDIA in the options market, it's actually rising in Apple.
  • 02:07 Why?
  • 02:09 Yeah, so so that's really striking to me because again, if you had looked to March, which I would say was peak exuberance in NVIDIA,
  • 02:16 essentially the mirror opposite was happening in Apple.
  • 02:18 It was a a lot of it was related to the China story.
  • 02:21 And I'd say, you know, look, this is this is a tale of a paddling duck.
  • 02:24 The reason I keep going back to this analogy is everything looks calm on the surface.
  • 02:28 Everything looks great from a VIX headline level, from index volatility.
  • 02:32 But you do get these violent rotations and often at a time we're look, when only four or five names are the, the massive contribution of return to the market, the fact that one is going one way and one is going the other way has actually become a diversifier in the market.
  • 02:46 I've, I've had investors joke with me, you know, why do I need a bond equity portfolio?
  • 02:50 I just need a MAG 7 versus everything else portfolio.