NVDA or SMCI? IV is the key answer!
The Nvidia GTC 2024 kicked off, and Lao Huang unexpectedly brought out the real deal, three important 'nuclear bombs':
Blackwell have improved 25 times compared to the previous generation, making it the world's most powerful chip.
The reasoning performance of the GB200 NVL72 compared to the H100 has been increased by up to 30 times.
Launching the AI project Project GR00T to assist humanoid robots.
However, Nvidia's stock price opened high and closed low, with a mere 0.7% increase at the close, making it the second worst performance on the day of the GTC conference in the past 8 years.
I think mainly it's due to 'Sell the News', where market expectations are largely met and there has been some profit-taking before the event.
The current status of several AI stocks also shows differences.
Nvidia— the leading chip company
AMD— a chip company with the possibility of filling
Semiconductor Computer (SMCI)— the strongest supply chain substitute with high volatility
SoundHound AI Inc (SOUN)— an AI meme
Intel (INTC)— currently a lagging chip company
Micron Technology (MU)— capacity supply-demand leading indicator. H
owever, the strength of options actually better reflects investor sentiment.
Looking at the absolute values, the pure speculative nature of SOUN still holds at around 200%, while the lagging INTC is relatively low. Looking at relative values, the IV of the leading Nvidia is currently in the middle of the upper and lower limits of the past year, the same for MU, SMCI, and SOUN, but AMD and INTC are currently closer to the lower limit.
Two other important indicators:
IV Rank (the current IV is the percentile of high and low values in the past year) and IV Percentage (the percentage of days in the past year when the current IV is lower than the previous IV), the closer they are, the more stable the current sentiment.
Among these, Nvidia's IV Percentage is 86%, the IV Rank is 76%; although AMD is slightly lower overall, it remains stable. However, SOUN and SMCI show a significant difference, indicating a faster decline in speculative sentiment.
Looking at the volatility curve, based on the PUT/CALL ratio, Nvidia has always maintained at around 2.17, which is also the median for these stocks.
However, looking at skewness, for example, considering the options on April 19th, most of them are right-skewed, meaning that the IV of Calls (out-of-the-money) is higher than Puts (out-of-the-money), which is not the case for the majority, large market indices such as SPY, QQQ are usually left-skewed over the long term.
Right-skewed means that buying (Calls) is more active, with a higher bullish sentiment.
However, SMCI is an exception, as it has been left-skewed in several periods of the options chain, indicating greater downward pressure
And SOUN carries meme stock characteristics, with buyers of Calls also being more active.
As for MU, due to the impact of earnings reports, it may be prudent to wait a few days to see how the reports change. Because MU's earnings reports have a certain leading effect, they may have some impact on the overall trend.
In summary, despite the lack of expected strength on the day of GTC, from the options market sentiment perspective, it is still not the time for sentiment reversal.
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