Market Overview
On June 5, all three major U.S. stock indexes fell: the Dow Jones Industrial Average fell 1.35% to 50,866.78 points; the S&P 500 fell 2.64% to 7,383.74 points; and the Nasdaq Composite fell 4.18% to 25,709.43 points. Strong May non-farm payroll data pushed up U.S. Treasury yields, market concerns about a Federal Reserve interest rate hike put pressure on highly valued technology stocks.
On June 5th, the total trading volume of US stock options was 95091549 contracts. Among them, 46% are put options and 54% are call options.
Top 10 Option Volumes
Top 10: NVDA、TSLA、AAPL、Micron Technology、Cboe Volatility Index、Strategy、Amazon.com、Meta Platforms, Inc.、Intel、Microsoft。
Nvidia's options signals: Short-term volatility, long-term bullish
Last Friday, NVIDIA shares plunged 6.2%. Large-volume options trading on Nvidia showed significant divergence: a massive $22 million bet on a bullish long-term contract attracted attention, while near-month contracts saw large-scale sell-call and buy-put combinations, revealing a complex interplay between institutional investors' expectations of short-term volatility and long-term trends.
Large-volume Trading
Recent large-volume options trading clearly outlines a strategy of "cautious in the short term, bullish in the medium to long term." Most notably, a massive $22.2256 million order was placed to buy out-of-the-money call options expiring in September 2026 (strike price $255.00). This is undoubtedly a core long position betting on a long-term upward trend or increased volatility.
However, in the near-month contracts, the strategy shifted towards defensiveness and range trading. On one hand, funds massively sold out-of-the-money call options expiring in June 2026 (strike prices $212.50 and $215.00, totaling over $5.17 million), aiming to create upward pressure and collect premiums. On the other hand, there were simultaneous buy orders for in-the-money put options expiring in July 2026 (strike price $210.00, transaction amount $6.855 million) for downside protection. Additionally, funds bought deep out-of-the-money put options expiring in October 2026 (strike price $170.00) to hedge against tail risk.
This combination of large orders indicates that while institutional investors remain firmly bullish in the long term, they are cautious about short-term trends. They tend to hedge or protect long-term positions by selling near-month call options and buy put options to manage downside risk, anticipating that the stock price may enter a period of fluctuation in the short term.
Tesla: Institutional trading focuses on "selling out-of-the-money call options".
Tesla Motors shares plunged over 6% last Friday. Options trading centered on selling out-of-the-money call options, exhibiting a "volatility-selling" characteristic by collecting premiums in a high-volatility environment. Meanwhile, large-scale buying of deep out-of-the-money call options in distant months foreshadowed upward price action.
Large Orders
The most significant trade was the simultaneous sale of out-of-the-money call options expiring in June 2026 with strike prices of $417.50 and $435, netting approximately $2.2 million in premiums. This strategy suggests that institutions believe the share price will struggle to break through $435. Additionally, a single sell order for out-of-the-money call options expiring in June 2026 with a strike price of $407.50 generated $1.75 million in trading volume, further intensifying selling pressure.
On the buying side, over 3,200 out-of-the-money call options expiring in June 2026 with a strike price of $450 were purchased, representing short-term bullish bets. More notably, a massive order totaling $1.81 million was placed to buy deep out-of-the-money call options expiring in November 2026 with a strike price as high as $700. This was clearly a "lottery-like" bet on a significant medium- to long-term upward trend for Tesla, aiming for extremely high leveraged tail returns.
On the other hand, the market saw extremely high trading volume (23,000 contracts) but very low premiums for selling out-of-the-money put options (strike price $240). This was more of a probabilistic strategy expressing the expectation that the stock price would not fall sharply while simultaneously seeking a small, certain return.
Strategy Reference
For investors who prefer a sell-side strategy, the approach of institutions selling out-of-the-money call options above $400 can be referenced. If unwilling to bear unlimited risk, a similar bearish call spread combination can be constructed (such as selling a call with a higher strike price while buying a call with an even higher strike price) to limit maximum losses.
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