The pullback to the $140 area is nothing major, just a normal retracement.
There was even a notable covered call roll into higher strikes: $NVDA 20241220 170.0 CALL$
Since this $170 call trade printed as a "sell", it's another case of differing interpretations.
Looking at this trader's prior roll from October's $135 strikes to November $155 calls, I'm inclined to view this latest trade as maintaining their spread strategy by closing the $155 calls and rolling up to the $170 strikes for December expiration.
Of course, if you interpret it as an outright $170 call sale, that's fine too - just be sure to hold stock against any short call positions.
The pullback does present an attractive entry for selling puts. I've opted to sell the $130 puts expiring next week ($NVDA 20241101 130.0 PUT$ ).
As for Tesla, I haven't seen any noteworthy flows yet. Likely more rangebound between $200-$240, in which case tomorrow's dip could offer a put sale opportunity.
Speaking of covered call strategies, there was actually a large covered call trade in the $SPY$ ETF on Tuesday: Stock purchased alongside selling of the $SPY 20241220 610.0 CALL$
The implication is a moderately bullish outlook, expecting a gradual grind higher. But with the upcoming nonfarm payrolls report and then midterm elections, institutions may take a pause from aggressive positioning to await results.
This bodes for a period of range-bound chop, which allows premium sellers to capitalize on elevated time decay.
An odd situation unfolded with Pinduoduo on Tuesday. Media outlets misreported Blackrock's holdings, sending the stock and options soaring initially. There was a quick buyer of 19,700 contracts of the weekly $140 calls ($PDD 20241101 140.0 CALL$ ).
About an hour later, the news was clarified as an error and PDD's stock retraced back to prior levels.
I noticed the unusual options flow but passed on joining. With FXI and KWEB ETFs showing no abnormalities, it seemed an isolated PDD event - hard to judge if it was a legitimate long-term catalyst or just a brief overreaction.
That's oftentimes the predicament with option buying - the entry can seem straightforward, but timing the exit is incredibly difficult unless you embrace a pure momentum mindset.
Awkwardly, that $140 call buyer still hasn't closed their position. I wish them luck - perhaps another positive catalyst emerges like a big rebound in Chinese equities next week. Or maybe this was all an elaborate headfake. You never know in this game.
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