Traders bet Nvidia's stock will return to record highs soon
Nvidia's stock dipped slightly Tuesday amid concerns over AI sector growth, but options traders responded with strong bullish bets, anticipating a rebound to record highs. Rising implied volatility and heavy call volume suggest traders expect a significant upward move by late May. The activity marks a shift from a previously stable trading range, with most premium spending concentrated in call options. Nvidia's upcoming earnings report is expected to be a key catalyst.
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Shares of Nvidia fell a bit on Tuesday after a WSJ report raised questions about OpenAI growth targets and the whole AI complex.Options traders used the sell-off as an opportunity to make bullish bets that the chipmaker will return to all-time highs.Up until Tuesday, Nvidia options had been cheaper to trade than in the VanEck Semiconductor ETF (SMH), a result of its tight trading range for much of the past year. That changed today as implied volatility rose alongside the price and traders piled into the stock with a mostly bullish bias.Traders now expect upwards of an 10% move in Nvidia by the end of next month, according to the price of the at-the-money straddle expiring May 29, a week after the company reports earnings.
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