Nvidia, Intel call buyers defy the dip in chip stocks
Semiconductor stocks are on the verge of posting their biggest drop since March 30 as a big early rally in Qualcomm reversed completely after the opening bell. VanEck Semiconductor ETF (SMH) It’s currently down about 1%, but call buyers in at least two major chip stocks are looking for further gains.
One of the group’s biggest trades this morning was the $2.2 million purchase of the $2,168 $210 strike call. Nvidia It will end on May 15. These are in-the-money contracts that are driving further upside for the AI leader, whose shares reached an all-time high of $212.65.
The pace of calls puts it more than 2-to-1 on Nvidia options, with call premiums accounting for more than 80% of the value traded. With earnings about a month away, volatility in the stock is still slightly cheaper than SMH.
Nvidia, YTD
Bulls seem resilient Intel At the same time, call volumes and premiums are lagging after a 100% decline from last month’s lows.
It looks like a trader is betting that the stock will go on an even wilder rise. Specifically, they created an unbalanced call spread; They sold 3,000 of the $60 strike calls expiring on June 18 and used that money to buy 10,000 of the $95 strike calls expiring the same day.
Intel, YTD
The trade will lose money if Intel is below $108 at expiration, but the value of the 10,000 calls purchased could rise quickly if volatility in the stock increases further — something we often see when retail investors snap up a new favorite.
