The short answer: ASML's decline doesn't seem to be impacting Nvidia, at least based on current options positioning.
In theory, ASML's sell-off should spark further pullback in Nvidia, but options flows suggest otherwise.
On Tuesday, both call and put openings were fairly normal - no aggressive lower strikes on the upside, nor any gapping put openings from outright bears.
Key institutional flows included:
The "Billion Dollar Man" rolling his $NVDA 20241220 125.0 CALL$ position higher
An unknown institution rolling their $NVDA 20241220 130.0 CALL$ up
Another spread trade in $NVDA 20241115 110.0 CALL$ and $NVDA 20241115 110.0 PUT$
Overall, no signs of heightened put buying.
While ASML's decline was sharp, it was likely the final washout. Management had already warned in 2023 that 2024 would mark the cycle trough, with a recovery expected in 2025 driven by High-NA EUV demand.
Moreover, semiconductor equipment group SEMI forecasts the 2024 equipment market will grow 3% year-over-year to $98.3 billion, with 2025 seeing a further 15% increase to $112.8 billion.
For those looking to buy ASML, the November 14th Investor Day event with formal guidance could represent a floor for the stock.
With this Friday's monthly option expiration, Nvidia price action should remain contained between $125-$135 this week given the open interest landscape.
Tesla options volumes have cooled substantially of late, so looking at 5-day new open interest highlights any meaningful changes.
Similar to Nvidia, normal two-way flows without any aggressive downside put buying nor lower call strikes being targeted by buyers.
While some may draw parallels to the July lows near $180, that was a broad market capitulation event rather than a premeditated single-stock bearish onslaught.
With no major earnings-event flows yet, Tesla should continue rangebound between $200-$220 for now.
$China Internet ETF - KraneShares (KWEB)$
On Tuesday, we saw a bullish call spread looking for $KWEB$ to rally above $36 but stay below $40 into year-end:
Buy $KWEB 20241220 36.0 CALL$
Sell $KWEB 20241220 40.0 CALL$
While directionally sensible, this may be too aggressive given the recent chop. For stock owners, a more defensive collar could be explored:
Stock
Buy $KWEB 20250117 28.0 PUT$
Sell $KWEB 20250117 40.0 CALL$
$20+ Year US Treasury Bond ETF - iShares (TLT)$
We also saw a 100,000 contract bullish call spread trade in bonds on Tuesday:
Buy $TLT 20241101 96.0 CALL$
Sell $TLT 20241101 99.0 CALL$
Looking at the chart, TLT appears to have found a floor. My preference would be to sell the $TLT 20241101 96.0 PUT$ for some extra yield against long positioning.
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