NVDA Rises After Citi Adds Stock to “Catalyst Watch” List

The equity sports attractively priced premiums at the moment

Digital Content Manager
Jan 7, 2021 at 9:52 AM
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The shares of NVIDIA Corporation (NASDAQ:NVDA) are up 3% at $519.70 at last check, after Citi added the chipmaker to its “Catalyst Watch” list, and noted it expects the security to bounce back from recent underperformance following next week's Consumer Electronics Show. However, news that a British competition regulator will probe NVDA's $40 billion buyout of U.K.-based chip designer Arm Holding could be capping additional gains. 

On the charts, the security has been cooling off from a Sept. 2, all-time-high of $589.06, after carving a channel of higher highs for much of the past year. Shares have made two attempts at those record levels since then, but have struggled with overhead pressure at the $540 level for the past couple of months. Year-over-year, NVDA is up 116.4%.  

Analysts are majorly optimistic toward the security coming into today, with 22 of the 26 in question sporting a "buy" or better rating, while only three carry a tepid "hold." Plus, the 12-month consensus price target of $592.84 is a hefty 14.2% premium to its current perch.

The options pits, however, lean much more bearish than usual. This is per NVIDIA stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 93% of readings from the past year. This means puts are being picked up at a faster-than-usual clip. 

Now could be a good opportunity to take advantage of NVDA's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 48% sits in the low 23rd percentile of its annual range, indicating the equity sports attractively priced premiums at the moment. 

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