Nvidia Corporation (NASDAQ: NVDA) stock dropped over 24% from its Feb. 16 high of $614.90 amid a two-month-long tech rout, but began to rebound over the last few trading sessions.
Although Nvidia stock is up over 200% since March 2020, some options traders are betting on further upside.
The Nvidia Trades: At 9:35 a.m. Thursday, a trader executed a call block of 749 Nvidia options with a $125 strike price expiring on May 21. The trade represented a $207,800 bullish bet for which the trader paid $4.45 per option contract.
At 9:54 a.m., a trader executed a call sweep of 294 Nvidia options with a $540 strike price expiring on April 1. The trade represented a $337,000 bullish bet for which the trader paid $4.50 per option contract.
At 9:36 a.m., a trader executed a call sweep of 489 Nvidia options with a $540 strike price expiring on April 1. The trade represented a $269,000 bullish bet for which the trader paid $5.50 per option contract.
At 9:36 a.m., a trader executed a call sweep of 292 Nvidia options with a $545 strike price expiring on April 1. The trade represented an $88,000 bullish bet for which the trader paid $3.02 per option contract.
At 9:38 a.m., a trader executed a call sweep of 149 Nvidia options with a $555 strike price expiring on April 16. The trade represented a $176,500 bullish bet for which the trader paid $11.84 per option contract.
At 9:38 a.m., a trader executed a call sweep of 111 Nvidia options with a $555 strike price expiring on April 16. The trade represented a $132,100 bullish bet for which the trader paid $11.90 per option contract.
At 9:38 a.m., a trader executed a call sweep of 119 Nvidia options with a $555 strike price expiring on April 16. The trade represented a $142,700 bullish bet for which the trader paid $11.99 per option contract.
Together, traders are betting over $1.14 million the share price of Nvidia is going higher.
Why It’s Important: When a sweep order occurs, it indicates the trader wanted to get into a position quickly and is anticipating an imminent large move in stock price.
A sweeper pays market price for the call option instead of placing a bid, which sweeps the order book of multiple exchanges to fill the order immediately.
These types of call option orders are usually made by institutions, and retail investors can find watching for sweepers useful because it indicates “smart money” has entered into a position.
When a block trade occurs, it indicates a hedge fund or institution has taken an options position.
A block trade always involves large sizing and is typically handled by a blockhouse outside of the open market. Because block trades don’t occur on the open market, the large size of the trades doesn’t create volatility in the stock being traded.
Like sweepers, blocktrades indicate “smart money” has entered a position.
What Nvidia Has Going For It: Nvidia’s newest graphics processing unit, the Nvidia RTX A6000, is expected to hit the shelves soon and on Thursday became available for pre-order.
The GPU will have 48GB GDDR6 memory, real-time ray tracing and rendering, accelerated artificial intelligence and photorealistic virtual reality. Investors may be betting this newest technology will be even more popular than expected.
NVDA Price Action: Shares of Nvidia were trading up 2.3% to $546.36 at last check.
Photo courtesy of Nvidia.
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