Why Options Traders Love This Semiconductor Stock

Goldman Sachs just hiked its price target on the stock

Deputy Editor
Feb 5, 2024 at 12:21 PM
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Nvidia Corp (NASDAQ:NVDA) stock is up 3.6% to trade at $685.25 last check, earlier trading at an all-time high of $694.97 after a premarket bull note from Goldman Sachs. The Wall Street analyst hiked its price target on NVDA to $800 -- a 20.9% premium to Friday's close -- after saying "various data points from the broader eco-system that point to sustained strength in demand for accelerated computing" could make for an upbeat Feb. 21 earnings report.

Freshly removed from its fourth consecutive weekly win, the semiconductor stock is now pacing for its third-straight daily win as well. The security already boasts a 38% year-to-date gain, and is up more than 224% over the last 12 months.

NVDA Chart February 52024

This price action hasn't gone unnoticed by options traders. In fact, per Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that attracted the highest weekly options volume during the last 10 days, NVDA was the second most popular ticker. Nvidia stock saw 7,638,762 calls and 5,195,626 puts exchanged. The weekly 1/26 620-strike call was the most popular contract in that time period.

MAO Chart February 52024

This penchant for bullish bets is nothing new. According to data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.52 ranks higher than 95% of readings from the past year.

These options traders are in luck, as the equity's Schaeffer's Volatility Index (SVI) reading of 36% sits in the 16th percentile of annual readings. This implies options traders are pricing in relatively low volatility expectations.

 

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