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Are Summer Highs in the Forecast for NVIDIA Corporation (NVDA)?

Optimistic NVIDIA Corporation traders scoop up longer-term calls

by 1/7/2014 2:48 PM
Stocks quoted in this article:

Option Brief: NVIDIA Corporation (NASDAQ:NVDA) is trekking higher again today, after the firm divulged new details regarding an upcoming, high-powered graphics chip on Monday. Meanwhile, bullish traders are pouncing on the stock in the current session, with about 15,000 calls changing hands so far -- more than four times the expected intraday norm. By contrast, fewer than 3,200 puts have traded.

Leading the pack is the June 18 strike, which has seen roughly 5,800 calls cross the tape -- most of which did so at the ask price, signaling buyer-fueled action. Because this option holds open interest of just 461 contracts, and implied volatility has ticked higher, it's likely that new long positions were implemented here.

In this case, the speculators are hoping NVDA will muscle north of the $18 mark by June options expiration. This denotes a rise of 11.5% from the stock's present perch at $16.14, as well as territory not surmounted since June 2011. However, even if the shares remain south of the strike price between now and the close on June 20, the most today's call buyers stand to lose is the initial cash outlay.

From a technical standpoint, NVIDIA Corporation (NASDAQ:NVDA) has advanced more than 26% during the past year. Additionally, the stock continues to trade above its 32-week moving average, which has served as support since last April.


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