Nvidia's Record-Breaking Rally Boosts Call Options' Appeal: Options Chatter

Luzi Ann Santos joined discussion · Oct 2 12:11

$NVIDIA (NVDA.US)$’s record-breaking rally is weakening the case for owning put options that could protect against a share slump, while boosting the appeal of call options, as the company reinforces its lead as the dominant player in artificial intelligence (AI) infrastructure.

Shares of the chip giant advanced as much as 2% to $191.05, a new intraday all-time high, Thursday. The stock of the only company to ever see its market capital soar above $4.5 trillion posted a sixth straight session of gains, helping provide support for the stock market that has come under downward pressure from the U.S. government shutdown.

The company’s shift from just a chip supplier to a full-stack data center vendor “enhances customer lock-in, positioning Nvidia as a data center’s sole system provider,” Bloomberg Intelligence analysts Kunjan Sobhani and Oscar Hernandez Tejada, wrote in a note Thursday. That strategy allowed the company to capture a “greater share of data-center spending” amid increasing spending on artificial intelligence (AI) infrastructure.

That customer lock-in helps sustain Nvidia’s growth, easing concerns that competitors could be grabbing market share from the AI chip leader.

(To see Nvidia's options chain, click here. For the stock options ranking led by Tesla, click here.)

Nvidia's Record-Breaking Rally Boosts Call Options' Appeal: Options Chatter

Volume on call options that give their holders the right to buy Nvidia shares at a specified strike price rose to 1.86 million Thursday, from 1.63 million a day earlier, and the 20-day average of 1.79 million. Put options volume reached 867,150 contracts.

“AI infrastructure is shifting to $2.8 million to $3.1 million NVL72 racks under Blackwell from roughly $250,000 DGX servers in the Hopper era, with more spending captured by Nvidia,” the analysts said. “The convergence of model-size expansion, cluster scaling and AI-specific data-center investment solidified GPUs as the foundation of AI compute infrastructure.”

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