Options traders are betting that Nvidia’s (NVDA) stock will rally in coming weeks.
Market activity shows that more than 1.5 million call options have been bought against Nvidia’s stock compared to less than 690,000 puts.
A “call” option is a bet that a stock’s price will rise over a set period of time, while a “put” option is a bet that the price will fall.
Call options have more than doubled puts by volume in recent days, with about two-thirds of the $600 million U.S. of NVDA stock options tied to calls.
So far in July, there have been almost three times as many call options bought against Nvidia stock as puts.
One trader bought a total $3.5 million U.S. of call options at the $200 U.S. strike price, with expiration occurring at the end of July.
The action in the options market suggests that Wall Street expects Nvidia’s stock to rally after several months of underperformance.
Shares of Nvidia are currently trading just under $200 U.S., down 17% since May of this year and up just 4% on the year.
Nvidia, the world’s largest publicly traded company with a $4.77 trillion U.S. market capitalization, has largely sat out the rally in stocks of microchip companies.
The VanEck Semiconductor ETF (SMH) has doubled in the last 12 months, rising 105%.
But now, traders appear to expect a reversal of fortunes among semiconductor stocks and for Nvidia to lead once again.
NVDA stock was trading at $194.97 U.S. on July 8.
Tech Insider
