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Nvidia Bulls Pile Onto Options, Undeterred by Stock Sell-Off: Options Chatter

Luzi Ann Santos joined discussion · Mar 4 03:35

$NVIDIA (NVDA.US)$ bulls piled onto bullish block trades of options Monday, undeterred by the stock slump that sent the chip giant’s market capital to its lowest level in almost six months.

Shares of Nvidia tumbled 8.8% to close at $113.92 in New York, taking its market capital to $2.78 trillion, the lowest level since September. The slump came amid concerns that escalating trade tensions could trigger a downturn for the semiconductor industry.

Nvidia Bulls Pile Onto Options, Undeterred by Stock Sell-Off: Options Chatter

President Donald Trump said Monday afternoon that the 25% import tariff on shipments from Canada and Mexico he previously announced will go into effect tomorrow. He also said he signed the order doubling the levies on China imports to 20%, according to a Bloomberg report. Earlier in the day, he said agricultural imports into the U.S. will also be slapped with tariffs starting on April 2.

“Escalating tariff fears may raise the probability of an industry downturn,” Bloomberg Intelligence analyst Ken Hui wrote in a note Monday. “President Trump's 10% tariff hike for Chinese goods risks a global semiconductor recession that may deepen and extend European chipmakers' current downcyles.”

Despite those fears, Nvidia bulls are keeping the faith.

(To see Nvidia's options chain, click here. For unusual option activities like these below, click here.)

(To see the options market page, click here. For the options ranking led by Nvidia and Tesla, click here.)

Fourteen of the 20 biggest block trades with premiums of at least $2 million posted were bullish positions, exchange data showed. The biggest of them involved an active buyer paying a $6.48 million premium for call options that give the holder the right to buy 150,000 Nvidia shares at $100 each by Jan. 15, 2027.

That trade, posted at 12:54:40 p.m., was likely part of a multi-strategy transaction that included the sale of put options that give the holder the right to sell the same amount of shares for the same strike price at that same expiration date. The seller collected a $2.69 million premium for selling those 1,500 put options.

The trade of those put options would be profitable for the seller should Nvidia continue to trade above the $100 strike price over the next 683 days, allowing the contracts to expire worthless.

Despite the recent stock sell-off, almost 90% of equity analysts who cover Nvidia continue to have a buy recommendation, with their average target price of $173.81, implying a return potential of over 50%.

The recent stock sell-off has shaved Nvidia’s multiple, with the shares now trading at 39.5X earnings. That’s lower than the five-year average of 54.5X. Over the past decade, Nvidia’s quarterly revenue has climbed to $39.3 billion, from $1.25 billion.

Share your thoughts on Nvidia in the comments section. Can the stock rebound from its current level or are there more pains coming? Let your voice be heard by voting below. And if you want to read more options columns, follow me here.

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