Nvidia’s Put Options Tally Rises as Shares Slip Amid China Worries: Options Chatter
$NVIDIA (NVDA.US)$ is seeing an increasing tally of outstanding put options that can shield investors against a slump amid a news report that major tech firms in China are opting not to purchase its latest artificial intelligence chip designed for the Asian nation.
Shares of the company fell 1.6% to close at $174.88 on Tuesday, declining for a second session after Reuters reported that Nvidia’s RTX6000D, its latest AI chip for the Chinese market, was seeing only “lukewarm” demand.
The news added to investor worries after China reportedly ruled Monday that Nvidia violated its anti-monopoly laws with its acquisition of Mellanox Technologies Ltd in 2020. That came after the U.S. added 23 China-based companies to its entity list which identifies the businesses believed to be engaged in activities “contrary to U.S. national security and/or foreign policy interests.”
The number of outstanding Nvidia put options, or the so-called open interest rose to 9.82 million contracts as of Monday, from the 20-day average of 9.11 million contracts. The latest total is about 96% of the call options open interest, the highest ratio in almost two months, exchange data tracked by moomoo showed.
While shares have fallen more than 3.5% from their closing high in early August, analysts including those at Bernstein maintained their “buy” rating on the stock and their price target Tuesday.
“Investors should look past these moves and instead treat them as the new norm,” CFRA analyst Angelo Zino wrote in a note to clients Monday. The “dialogue between the nations should be viewed positively for the likes of NVDA and AMD ( $Advanced Micro Devices (AMD.US)$), which patiently await ramping AI products into the region.”
The implied volatility, the options market’s forecast of the price swings in Nvidia’s stock over the next 30 days was at 39.23%. That’s down from a high of almost 59% on April 28 when the stock was still trading below $110, struggling to claw its way out of a slump.
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Luzi Ann Santos
Moomoo Senior News and Community Manager
Former editor at Bloomberg, ex-commentary editor at Lazard. Posts aren’t investment advice. Views are just mine.
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Gunslinger45 : I don’t know if I will attention to what China has accused them of doing in 2020. could just be a ploy to hammer them in negociations for chips they want to make a deal on
webguybob : hmmm... I think I'll still hold.
DrStranger29 : buy a long term call and short term put in case FED start to defy trump again.China may design its own chips for own use but who will buy them outside?=)
MaxWell445 DrStranger29 : Dongda's companies have always been ahead in terms of promotion, yet they've been proven wrong so many times.