Nvidia Stock Options Pop Before Fed Meeting

The stock boasts attractively priced premiums at the moment

Deputy Editor
Jan 30, 2023 at 1:02 PM
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Chipmakers are taking a beating ahead of the Federal Reserve's two-day policy meeting, where investors expect the central bank to issue another interest rate hike. One such stock is NVIDIA Corporation (NASDAQ:NVDA), which is 3.5% lower to trade at $196.55 at last glance. 

Approaching the Fed's decision, and following a semiconductor oversupply, options bears have targeted NVDA with enthusiasm. So much so that the equity landed on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that have attracted the highest weekly options volume within the past two weeks. According to White's data, 4,192,687 puts were exchanged over this 10-day period, compared to 3,935,328 calls. However, the most popular contract during this time was the weekly 1/27 200-strike call.

MAO Chart January 302023

Looking further back, Nvidia stock peaked in November 2021, when it touched an all-time high of $346.47. In the last 12 months, the security is down 14%, though it's managed to bounce from its mid-October, more than two-year rut, just above the $108 level.

NVDA Chart January 302023

This penchant for bearish bets is in line with sentiment over the past several weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NVDA sports a 50-day call/put volume ratio of 1.14 that sits in the 94th percentile of readings from the past 12 months.

Echoing this, Nvidia stock's Schaeffer's put/call open interest ratio (SOIR) of 1.38 ranks higher than 100% of annual readings. In other words, short-term options traders have not been more call-biased in the past year.

Now could be a good time to weigh in on the stock's next move with options, too, as it sports attractively priced premiums at the moment. This is per the security's Schaeffer's Volatility Index (SVI) of 50%, which sits in the relatively low 12th percentile of its annual range. What's more, Nvidia stock tends to outperform said expectations, based on its Schaeffer's Volatility Scorecard (SVS) rank of 82 -- out of a possible 100.


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