Traders Pile Into Nvidia Calls as Chip Stocks Sell Off
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- Nvidia shares moved into positive territory Tuesday despite a 5% sell-off in the VanEck Semiconductor ETF (SMH), outperforming the broader chip sector a day after a research report claimed the AI leader was at least a year behind on next-gen server rack manufacturing.
- Nvidia stock traded just under $200, down 17% from its May record and up just 4% year-to-date, as investors shifted attention to other AI components like memory-makers.
- Nvidia options saw more than 1.5 million calls traded Tuesday versus fewer than 690,000 puts, with more than twice as many calls bought as puts bought, per ThinkorSwim data.
- SMH options flipped the script, with puts outpacing calls nearly 4-to-1; traders bought 33,000 puts against just 7,300 calls, signaling bearish positioning on the broader chip ETF.
- Nvidia disputed a SemiAnalysis report claiming its next-gen Kyber server rack faced delays, and on Monday calls more than doubled puts by volume, with about two-thirds of the $600 million in NVDA options premium tied to calls.
- One trader bought $3.5 million of 200-strike Nvidia calls expiring at the end of July, needing roughly 5.5% more in the stock to break even by month-end.
- The 200-strike call expiring Wednesday was the most-traded contract, changing hands nearly 170,000 times for $11 million in total premium, per SpotGamma data.
Why it matters: The call-put split in Nvidia (2:1+ bullish) running counter to the SMH ETF (4:1 bearish) shows a concentrated, stock-specific bet that Nvidia's two-day stabilization near $200 turns into a rally, with $3.5 million in July 200-strike calls needing a 5.5% pop to pay off — a tight window that amplifies the leverage risk for those bullish traders if the SemiAnalysis delay narrative gains more traction.
