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NVIDIA Corporation (NVDA) call options are popular on investor day
NVIDIA Corporation (NASDAQ:NVDA) is hosting its annual investor day today, and it looks like option players are gambling on a short-term pop for the stock. Intraday call volume is running at five times the average pace, and the security's 30-day at-the-money implied volatility has edged 3.7% higher to 27.6%.
Seven of the top 10 strikes are on the call side, with potential buy-to-open activity detected at the March 22.50, 23.50, and 24 calls. By purchasing the contracts to open, the buyers expect NVDA to move north of the strikes by Friday's close, when front-month options expire. At last check, the shares were 0.4% higher at $23.05 -- just a hair's breadth from their four-year peak of $23.30, tagged last Wednesday.
Meanwhile, less aggressive bulls are circling the security's weekly 4/2 22-strike call. By purchasing the contracts to open, the speculators are hoping NVDA extends its journey north of $22 through the close on Friday, April 2, when the series expires. The volume-weighted average price (VWAP) of the calls is $1.22, meaning the buyers will profit if NVDA conquers $23.22 (strike plus VWAP) within the options' lifetime.
Today's appetite for bullish bets runs counter to the trend, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.82 sits in the 83rd percentile of its annual range. In other words, option buyers have picked up NVDA puts over calls at a faster-than-usual clip during the past two weeks.
Echoing that, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.83 registers in the 89th percentile of its annual range. In simpler terms, short-term option players have rarely been more put-heavy during the past year.
Elsewhere, despite NVIDIA Corporation's (NASDAQ:NVDA) run up the charts, just 10 of 23 analysts have doled out "buy" or better opinions. Likewise, short interest represents more than 12 sessions' worth of pent-up buying demand, at the equity's average pace of trading. Should NVDA continue to barrel higher, a reversal in sentiment among option traders, a round of upgrades, or a short squeeze could translate into added fuel for the shares.