Nvidia bets dominate US options market as AI fervor

Options on the Nvidia accounted for 25 cents of every dollar of premium – the price of the contracts – traded on single stock options in the US over the last month, nearly $3 billion in options premiums traded on the chipmaker's daily average, it showed. a Reuters analysis of Trade Alert data. During several recent sessions, Nvidia surpassed the Tisla as the most traded name in the options market of the day.

Nvidia briefly reached US$2 trillion in market value for the first time last Friday (23) – two days after releasing its quarterly results – driven by insatiable demand for its chips, which are highlighted in the technology craze. artificial intelligence generative.

Nvidia recently became the third largest listed company in the US in terms of market capitalization. Its shares represent a 4,5% weighting in the S&P 500, giving them a disproportionate influence on the movements of the broader index.

Nvidia options should remain popular with traders, “both from a hype and mechanical index standpoint,” said Garrett DeSimone, head of quantitative research at OptionMetrics. “It represents a large portion of the weighting of the S&P 500.”

Options on the stock have attracted a variety of bets, including those that protect against a slide in the stock toward $350 by March and others thatariam fruit if the stock extends its meteoric rise toward $900 and beyond in the coming months.

Nvidia shares rose 1,4%, to US$798,90, last Monday afternoon (26).

A number of other AI names also attracted heavy options volume, including Super Micro Computer and Arm Holdings. Nvidia shares are up about 60% year to date, while Super Micro Computer is up 200% and Arm is up 77%.

Nvidia is not the first company to captivate options players. Derivative bets on the electric vehicle manufacturer Tesla accounted for about half of all stock option premiums, indexes and ETFs in October 2021 as the company's shares soared. The options of Tesla continue to be an attraction that still frequently appears on the list of the most traded options on any given day.

While the frenzied pace of trading in Nvidia options may slow now that its earnings report is behind it, market participants said the AI ​​theme is likely to continuearia popular among investors.

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