NVIDIA Corporation (NVDA) Record High Draws Option Bulls

NVIDIA Corporation (NASDAQ:NVDA) is seeing a rare surge in call volume

Sep 30, 2016 at 2:15 PM
facebook X logo linkedin


A rumored $30 billion takeover -- and a big rally in the broader stock market -- is helping to lift semiconductor stocks today, with chipmaker NVIDIA Corporation (NASDAQ:NVDA) along for the bullish ride. In fact, NVDA stock hit a record high of $69.19 earlier, and was last seen up 2.1% at $68.84. While eleventh-hour traders are eyeing even higher highs through tonight's close, today's accelerated call volume bucks the withstanding trend seen in NVDA's options pits.

By the numbers, around 26,000 call options have changed hands so far -- two times the average intraday pace -- compared to roughly 12,000 put options. Most active is NVDA's weekly 9/30 68-strike call, where it looks like new positions are being purchased. If this is the case, the goal is for NVDA to continue rallying through tonight's close, when the weekly options expire.

More broadly speaking, though, long puts have been initiated at a quicker-than-usual clip relative to calls in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NVDA's 10-day put/call volume ratio of 0.66 ranks in the 65th percentile of its annual range.

Even more telling is NVDA's Schaeffer's put/call open interest ratio (SOIR) of 1.25. Not only does this show that puts outweigh calls in the front three-months' series of options, but it sits just 17 percentage points from a 52-week peak. Simply stated, short-term speculators are more put-heavy than usual toward the equity.

Looking at the charts, it's likely some of the recent put buying -- specifically, at out-of-the-money strikes -- is a result of shareholders protecting paper profits against any unexpected downside. NVDA -- along with several of its sector peers -- has put in a standout technical performance in 2016, more than doubling in value. However, if past is precedent, NVIDIA Corporation (NASDAQ:NVDA) and its fellow chipmakers could encounter some historical headwinds in the fourth quarter, especially given the upcoming U.S. presidential election.

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