Shares of Nvidia fell slightly on Tuesday after a WSJ report raised questions about the growth goals of OpenAI and the entire AI complex.
Options traders used the selloff as an opportunity to make bullish bets that the chipmaker will return to all-time highs.
Until Tuesday, Nvidia options were cheaper to trade than in VanEck Semiconductor ETF (SMH)a result of the tight trading range for much of the past year. That changed today as implied volatility rose alongside price and traders invested in the stock with a predominantly bullish bias.
Traders now expect Nvidia to rise more than 10% by the end of next month based on the price of the at-the-money straddle expiring on May 29, a week after the company reported earnings. Call volume was more than double that of puts on Tuesday, and premiums tilted heavily toward calls. According to data from SpotGamma, $648 million of a total of $818 million was spent on calls.
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Nvidia, 1 month
Still, traders at NVDA are taking a more measured approach compared to some of their competitors. Nvidia’s biggest trades tended to be spreads, which included a combination of buy and sell calls. Specifically, there was a buyer of a 200/260 call spread expiring next March.
You can bet that NVDA stock will be at $260 by March 2027, up 21%.
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