Thursday saw two massive bullish option trades: a mystery whale bought $600 million in SPY calls, while the $200 million trader rolled his NVDA call position higher.
$SPY ETF (SPY)$
On Thursday's open, huge call buying emerged in SPY. Someone closed out 30,000 contracts of the November 15th $580 calls, but rolled that position into 60,000 contracts of the November 29th $600 calls - doubling their upside exposure:
Close $SPY 20241115 580.0 CALL$ for 30,000 contracts
Roll and Buy $SPY 20241129 600.0 CALL$ for 60,000 contracts
Not much explanation needed - just an overwhelmingly bullish bet on the S&P 500 continuing higher.
$Nvidia (NVDA)$
The $200 million trader struck again, closing their $125 NVDA calls and rolling that position into the December $135 strikes:
Close $NVDA 20241220 125.0 CALL$ for 167,900 contracts
Roll and Buy $NVDA 20241220 135.0 CALL$ for 167,900 contracts
There was some funky printing on the closeout leg showing as a buy, but open interest declined by 14,500 contracts yesterday at the $125 strike which had 55,600 contracts remaining, confirming this as a roll.
Previous roll updates on the $200 million NVDA trader: The $200 Million Whale Rolls NVDA Calls Higher Ahead of Earnings
While only the first half of 2022 is documented, the pattern is consistent - this is their typical pre-earnings roll, keeping position sizing intact which reflects continued bullish momentum.
Coupled with the SPY $600 calls, institutions remain firmly bullish on NVDA into earnings.
$Tesla (TSLA)$
The biggest issue currently is the daunting psychology of chasing at these elevated levels. Option strategies need to be tailored to individual risk tolerance and emotional drawdown limits.
The most conservative approach is simply selling puts, harvesting rich premiums from inflated volatilities. Choose lower strikes that you wouldn't mind getting executed at and adding stock.
The problem with TSLA is its proclivity for explosive gaps higher - having your account tied up in short puts yielding minimal gains while the stock blasts off is agonizingly painful.
Outright call buyers face similar risks of pullbacks erasing unrealized gains. The profit/loss curves at these entry points are brutal on even modest retracements.
The balanced approach blending both perspectives is the call/put ratio spread - buying OTM calls but funding those positions by selling OTM puts.
However, there appears to be a schism in how whales are positioning. Some believe TSLA may stall out at $300.
On Thursday, heavy call selling emerged in the November 29th $300 strikes ($TSLA 20241129 300.0 CALL$ ) with 16,000 contracts sold. Another 20,000 contracts were sold in the December 6th $300 calls ($TSLA 20241206 300.0 CALL$ ).
But given SPY's continued bullish momentum, a $300 TSLA stall seems unlikely. Or at minimum, those $300 call strikes seem overly greedy if you're outright selling calls.
TSLA's notable call buy was a roll higher, from the $255 strikes into the $295 calls:
Close $TSLA 20241115 255.0 CALL$
Roll and Buy $TSLA 20250221 295.0 CALL$
The directional tags showed the $255 print as a buy and $295 as a sell, but this is the same trader we've covered previously who has been persistently rolling their bullish call exposure higher, similar to the $200 million trader's approach. Their initial $255 entry was absolutely a buy not a sell.
Of course, if you want to trust the directional tags, outright call selling can work but caps further upside. Just don't go naked.
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