Wary Nvidia Traders Eye Call Option Play Ahead of Earnings
- Seeing ‘buyer exhaustion,’ says Tallbacken CEO Michael Purves
- Selling short-dated calls makes sense for stock longs, he says
A Nvidia Corp. HGX H100 artificial intelligence supercomputing graphics processing unit.
Photographer: I-Hwa Cheng/BloombergThis article is for subscribers only.
Hedging against big swings in Nvidia Corp.’s share price with options is expensive, but derivatives traders are being tempted to sell contracts to earn some extra yield as the stock corrects its massive rally.
For investors that expect further stock gains to be capped for the moment, call options are offering attractive yields, some market watchers say. With implied volatility for the artificial intelligence darling hovering near its year-to-date highs, options bets that the gains in the chipmaker’s stock will be capped below 10% before the company reports first quarter earnings on May 22 are selling for a 2% premium.