NVIDIA Corporation (NVDA) Spread Trader Aims For Fresh Highs

A long call spread was seemingly initiated on NVIDIA Corporation (NVDA)

by Alex Eppstein

Published on Dec 8, 2015 at 3:21 PM
Updated on Jun 24, 2020 at 10:16 AM

NVIDIA Corporation (NASDAQ:NVDA) has been red-hot for months. Up 1.4% at $33.59, the stock has rocketed almost 50% higher since early September, and is a chip-shot from last week's seven-year peak of $33.81. In today's options pits, it looks like one speculator's gambling on a run to even higher highs for the visual computing specialist.

Diving right in, data from Trade-Alert indicates a potential bull call spread is being initiated at the weekly 1/8 35- and 37-strike calls, for a net debit of $0.46 per spread -- or a total of about $250,000 (net debit * 5,500 contracts * 100 shares per contract), which represents the most he can lose. In so doing, the trader expects NVDA will muscle up to $37 -- territory not charted since late 2007 -- by the close on Friday, Jan. 8, when the weekly series expires.

Option traders have been bullish on NVDA for the past couple weeks. The stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.70 ranks in the top quartile of its annual range. Likewise, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.56 rests below all but 13% of comparable readings taken in the previous year.

Looking ahead, NVIDIA Corporation (NASDAQ:NVDA) is scheduled to appear at the Barclays Global Technology Conference tomorrow afternoon. Any positive news could serve as a bullish catalyst for the shares, to the delight of recent call buyers.

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