Nvidia fell into a technical adjustment zone in just one day. Earlier on Tuesday, 0.06 million put spread options contracts with a strike price of 119/115 US dollars were purchased, with a total cost of approximately 1.23 million US dollars. On Wednesday's early trading session in the US stock market, about 58,000 of the same CFDs contracts were traded at once, priced at approximately 7.83 million US dollars. Market participants said the trade seems to be a closing position. If it is the same trader, the total profit is over 6.5 million US dollars.
A trader who accurately shorted the options market$NVIDIA (NVDA.US)$made a profit of over $6.5 million in just one day.
Earlier on Tuesday, 0.06 million put spread options contracts were bought at $119/$115, with a total cost of approximately $1.23 million. This option is equivalent to buying a put option with a strike price of $119 and selling a put option with a strike price of $115 for the same expiration date.
In other words, the buyer is betting that Nvidia's stock price will drop below $119 by this Friday, while reducing the cost by selling the lower strike price of $115 put option. This reduces the risk compared to simply buying the $119 put option, but also limits the maximum profit potential.
In order for the above trade to be profitable at the expiration of the option this Friday, Nvidia's stock price needs to fall by nearly 6% from Tuesday's closing price. In just one day, Nvidia, the "center of the US stock universe," really fell, and this trade quickly paid off.
On Wednesday, the trading volume of some short-term options contracts surged. Some market participants believed that Keith Gill, known as Roaring Kitty, the leading retail investor, may have sold some of the company's recently disclosed options positions.$PHLX Semiconductor Index (.SOX.US)$The index plummeted nearly 7%, tracking the largest drop in the hottest ETF since the outbreak. Nvidia fell 6.6% and was the worst performer among the "tech sisters" who fell in unison,$ASML Holding (ASML.US)$falling nearly 13% and even temporarily triggering a circuit breaker. Nvidia eventually closed down 6.6% at around $118, falling into a technical correction area.
It is worth mentioning that on Wednesday morning, about 58,000 identical spread contracts were traded at once for a price of approximately $7.83 million. Although it cannot be confirmed whether this was done by the same investor, market participants said that the transaction appears to have been closed. Therefore, if it was the same trader, the total profit was over $6.5 million.
Editor/Somer