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The shares of NVIDIA Corporation (NASDAQ:NVDA - 13.61) are bucking the broad-market trend lower this afternoon, and it appears more than a few option bulls are betting on extended upside for the stock. Already today, the security has seen roughly 16,000 calls cross the tape -- more than twice its average intraday call volume, and close to seven times the number of NVDA puts exchanged.
Garnering the most attention, the security's near-the-money August 14 call has seen nearly 11,300 contracts change hands -- mostly at the ask price, pointing to buyer-driven volume. Plus, implied volatility on the front-month option was last seen 7.2 percentage points higher, hinting at newly initiated positions. Assuming the calls are, in fact, being purchased to open, the buyers are hoping NVDA surmounts the $14 level within the next several weeks.
However, today's appetite for long calls is just more of the same for NVDA. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has racked up a 10-day call/put volume ratio of 6.19, indicating that traders have bought to open more than six calls for every put during the past two weeks. What's more, this ratio stands higher than 84% of all others of the past year, suggesting options players have upped the bullish ante recently.
Upon closer inspection, we find that peak call open interest in the front-month series resides at the aforementioned August 14 strike, with close to 17,000 calls outstanding. In the short term, this abundance of bullish bets could actually translate into an options-related speed bump for NVDA.
Furthermore, the shares are already battling trendline resistance in the $14 neighborhood. Specifically, the stock's 50-month moving average has descended into the area. This trendline, along with its 20-month counterpart, has contained NVDA's rebound attempts since May 2011.