On Monday, a notable options trade involving Nvidia stock, valued at over $100 million, suggested that some investors view the current controversies as a buying opportunity.
The trade involved purchasing 52,000 call options at a 195-strike price, expiring on February 19, for approximately $57 million, while simultaneously selling an equal number of 245-strike calls, effectively reducing the trade's cost by $10 million. This bullish call spread requires Nvidia's stock to exceed around $206 by the expiration date, which represents a 15% increase from current levels.
If the stock reaches the 245-strike call, it would signify a nearly 40% rally, returning to its all-time high of $243. According to SpotGamma, this trade appears to be a 'roll' from a previous 210/255-strike call spread, indicating a more aggressive stance by the trader to gain higher upside exposure. The increased delta exposure suggests that the trader expects Nvidia's stock to rebound quickly.
By midday, the overall options activity for Nvidia leaned bullish, with 57% of the volume tied to call options and over $660 million in call premiums initiated by buyers. The most actively traded contract was the 180-strike call, which requires a modest 1.2% increase in Nvidia's stock price to break even by the end of the trading day