Nvidia CEO Jensen Huang explains the architecture of Vera Rubin at the Computex trade show in Taipei, Taiwan, on June 1. Even as semiconductor shares have fallen sharply in recent sessions, analysts say Nvidia still has room to climb. [Reuters]
Nvidia CEO Jensen Huang explains the architecture of Vera Rubin at the Computex trade show in Taipei, Taiwan, on June 1. Even as semiconductor shares have fallen sharply in recent sessions, analysts say Nvidia still has room to climb. [Reuters]

As semiconductor shares remain caught in a volatile stretch on US markets, a growing number of investors believe Nvidia alone could stage an independent rally.

CNBC recently reported that while Nvidia has fallen about 17 percent from its peak in May — with its share price slipping below $200 toward the end of last month — bullish options flows for the stock stand out sharply against the broader semiconductor selloff. Investors who expect the downturn to persist for other chipmakers still see meaningful upside in Nvidia, CNBC said.

According to electronic trading platform ThinkorSwim, Nvidia recorded more than 1.5 million call-option trades on Tuesday. Put options, by contrast, failed to reach 690,000, meaning call buying outpaced puts by more than two to one. A similar pattern held on Monday, when calls outnumbered puts by nearly three to one.

A put option gives the holder the right to sell a share at a predetermined price at a future date and is typically bought when an investor expects the asset's price to fall. A call option, conversely, gives the holder the right to buy a share at a set price and is generally purchased when a price increase is anticipated. The fact that Nvidia call volumes exceeded put volumes signals broad market expectations of a share price rise.

Particularly notable, a trader believed to be acting alone spent roughly $3.5 million buying call options with a $200 strike price expiring at the end of this month. Each contract cost just under $7 at the time of the trade. CNBC said Nvidia's share price would need to climb an additional 5.5 percent before the end of the month for the position to turn profitable — a bet that the stock has at least that much further to run from current levels.

The picture looks starkly different for the broader chip sector. In VanEck's semiconductor-themed ETF SMF, put options betting on a decline outnumbered calls by four to one: while traders executed 7,300 call contracts, put buying reached 33,000. The divergence reflects a market consensus that the wider semiconductor sector will continue to weaken.


kate01@heraldcorp.com