Nvidia Drop Wipes Out 220,000-Plus 225 and 222.5 Calls as Stock Slides 6.5%
Updated
Updated · CNBC · May 18
Nvidia Drop Wipes Out 220,000-Plus 225 and 222.5 Calls as Stock Slides 6.5%
2 articles · Updated · CNBC · May 18
More than 220,000 Nvidia call contracts at the 225 and 222.5 strikes were on track to expire worthless Monday after the stock fell over 6.5% from Thursday's high.
About 15% of Nvidia options traded by midday were same-day expiries, extending Friday's pain when $114 million of 235-strike call premium slipped out of the money.
Trading stayed heavily bullish despite the drop: Nvidia was the market's fifth-most active options name with more than 3 million contracts and over $1.3 billion in premium, including roughly $1 billion tied to calls.
Order flow was mixed, with call volume running at more than double puts but many calls trading at the bid or lower—often a sign of selling—while the four biggest trades were still bullish in-the-money call buys of at least $10 million each.
Ahead of earnings, options imply a 6.25% move versus an average realized move of 3.2%, a notable setup after Nvidia shares fell following each of the past three reports, including 5.5% in February.
As Nvidia call buyers lose millions, what catastrophic risk do profitable option sellers face before Wednesday's earnings?
Nvidia's stock fell after its last three earnings. Can its powerful AI growth finally break this losing streak on May 20th?