Options Optimism Builds as NVIDIA Corporation (NVDA) Nabs Newest High

NVIDIA Corporation (NVDA) hit its newest record high earlier, and the stock's call options are again popular

Jul 27, 2016 at 1:36 PM
facebook X logo linkedin

NVIDIA Corporation (NASDAQ:NVDA) is fresh off yet another all-time high, trekking as far north as $57.22 earlier. This is more of the same for the stock, which has been an absolute beast on the charts. Amid this technical tenacity, the options crowd has been growing more bullish toward the visual computing specialist.

For starters, traders have bought to open double the amount of calls as puts during the last 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- yielding a call/put volume ratio of 2.05. Two weeks ago, this ratio came in at a significantly less top-heavy 1.43, suggesting options traders have been growing hungrier for bullish bets.

This call bias is underscored when looking at open interest levels on short-term, near-the-money options. Specifically, NVDA's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) checks in at 0.27, with calls nearly quadrupling puts. In today's trading, it's more of the same. Roughly 9,500 calls have been exchanged, compared to fewer than 2,600 puts.

Now appears to be an opportune time to buy NVDA calls, too, based on the stock's historical performance. Looking back a decade, NVDA has been one of the best stocks to own in August, sporting positive returns 90% of the time, in addition to an average single-month gain of 9.3%. Plus, short-term options are relatively inexpensive at the moment, based on the equity's Schaeffer's Volatility Index (SVI) of 51%, which ranks in the low 37th annual percentile.

As explained earlier, NVIDIA Corporation (NASDAQ:NVDA) has been a technical stalwart. In the last 60 sessions alone, the stock has outperformed the broader S&P 500 Index (SPX) by more than 50 percentage points -- perhaps explaining why it remains in overbought territory. That said, at last check, the shares were off 1.1% at $55.99.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI