Humanoid robots are on display at the booth of U.S. chipmaker Nvidia during the 4th Supply Chain Expo in China.
Johannes Neudecker | Picture Alliance | Getty Images
Is tech’s biggest sleeping giant about to wake up?
Shares of Nvidia fought into the green despite a 5% sell-off in chip stocks tracked by the VanEck Semiconductor ETF (SMH), a notable outperformance a day after a research report claiming the AI leader was at least a year behind on manufacturing of its next line of server racks.
The stock’s trading just under $200, a level it’s flirted with since late last month, down 17% from its May record and up just 4% on the year, as investors have turned their attention to other AI components, like the memory-makers.
One thing Nvidia has those stocks don’t right now: bullish options flows.
Nvidia, YTD
More than 1.5 million calls traded in Nvidia Tuesday, compared to under 690,000 puts, with more than twice as many calls bought versus puts bought, according to ThinkorSwim data. Volume ratios are about the opposite in the sector ETF, with puts outpacing calls almost four-to-one in SMH, with traders buying 33,000 puts, compared to just 7,300 calls.
Similar action took place in Nvidia Monday after the company disputed a report by SemiAnalysis that its next-gen Kyber server rack was running into delays. Calls more than doubled puts by volume with about two-thirds of the $600M of NVDA options premium tied to calls, and almost three times as many calls bought versus puts.
One group of trades that looked like they were initiated by a single trader bought a total $3.5 million of the 200-strike calls expiring at the end of July. Those contracts cost just under 7 bucks each at the time of the trade, meaning they still need about 5.5% more to pay off by month-end.
It looks like traders are hoping Nvidia’s two-day firming will turn into a rally: as of writing the top five contracts are all calls expiring Wednesday. The most popular was the 200-strike, which traded almost 170,000 times for a total $11 million in premium, according to SpotGamma data.
