A substantial options trade executed on Nvidia stock on Monday suggests that some market participants view the recent controversies surrounding the chip leader and its chief executive as a prime opportunity to buy. The transaction, which took place approximately one hour after the market opened, involved more than $100 million in options premium and marked a shift toward a more aggressive bullish stance.
The core of the new position involved the purchase of 52,000 call options with a strike price of $195 that expire on February 19. These contracts were valued at approximately $57 million. To reduce the overall cost of this long position, the trader simultaneously sold the same number of call options with a higher strike price of $245 for the same expiration date. This action lowered the net cost of the trade by about $10 million.
The resulting position is a bullish call spread. For this trade to be profitable by the expiration date, Nvidia shares would need to trade above approximately $206. This represents a price increase of roughly 15% from current levels. If the stock price reaches the short strike of $245, it would signify a nearly 40% rally, returning the stock to its all-time high of $243, a level last reached on October 6.
According to analysis from SpotGamma, this move appears to be part of a roll down from a previous position. The trader closed out an existing call spread involving 210 and 255 strikes, which was valued at about $42 million, to establish the new, lower-strike position.
Brent Kochuba, founder of SpotGamma, explained via phone that the trader became more aggressive by rolling the spread down to lower strikes. This strategy increases upside exposure and results in a higher delta. Kochuba noted that the trader chose a call spread because volatility is currently expensive ahead of the upcoming earnings report. He described the move as a significant increase in upside delta exposure.
In options terminology, delta measures how quickly the price of an option reacts to changes in the underlying stock price. By taking a position at lower strikes, the trader has created a setup that will generate profits more rapidly if Nvidia's stock price rallies. This configuration indicates a higher level of conviction that the chipmaker's shares are poised for a near-term rebound.
The purchase of the 195-strike calls for $57 million was identified as the single largest options trade on the market tape on Monday. SpotGamma data further revealed that Nvidia dominated activity among the top 20 options trades by dollar amount, with 12 of those positions involving the semiconductor giant.
Overall market flows for Nvidia leaned bullish by midday. Data showed that 57% of the options volume was tied to call options, and more than $660 million in call premium was likely initiated by buyers. The most active single contract by volume was the 180-strike call expiring on Monday. This specific contract requires Nvidia to recover just 1.2% of its value by the close of trading to break even.
