Surging Semiconductor a Popular Call Trader Play

The stock has been an option trader favorite over the last 10 days

Deputy Editor
Mar 4, 2024 at 1:14 PM
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Nvidia Corp (NASDAQ:NVDA) just leapfrogged Aramco to become the world's third-most valuable public company, sitting behind tech sector heavyweights Apple (AAPL) and Microsoft (MSFT). Ongoing hype around artificial intelligence (AI) helped the chipmaker last week topple the $2 trillion mark for the first time ever. NVDA earlier touched an all-time high of $864.33 to reach $2.11 trillion in market capitalization, and was last seen 3.7% higher at $853.29.

The 'Magnificent Seven' member also boasts a consistent place on Schaeffer's Senior Quantitative Analyst Rocky White's list of stocks that attract the highest weekly options volume over the preceding two weeks. The security once again snagged a place on White's list, taking the second-place spot. Over the last 10 trading days, 10,084,420 calls were traded compared to 6,534,353 puts, with the weekly 3/1 800-strike call standing out as the most active contract.

MAO Chart March 42024

A broader look paints an equally bullish picture. According to data at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 1.50 ranks higher than 87% of readings from the past year. Echoing this, Nvidia stock's Schaeffer's put/call open interest ratio (SOIR) of 0.77 that sits lower than 97% of annual readings implies a call-bias amongst short-term premium traders.

Those looking to join can do so for a relative bargain. NVDA's Schaeffer's Volatility Index (SVI) of 38% stands higher than 20% of annual readings, implying options traders are pricing in lower-than-usual volatility expectations.

Nvidia stock just recorded its ninth-straight weekly win, its best such streak since February 2023. To say the shares are outperforming is an understatement. The broader-market SPDR S&P 500 ETF Trust (SPY) is up 7.9% in 2024, while the semiconductor sector's most popular exchange traded funds (ETF), the iShares Semiconductor ETF (SOXX) and VanEck Semiconductor ETF (SMH), boast 20% and 28.7% year-to-date leads, respectively. In the same time frame, NVDA is up 72.4%.

NVDA Chart March 42024


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