Who wanna take NVDA stakes above 130?
The only big company that can still maintain an IV Percentile above 70% by the Fourth Witching Day is probably $NVIDIA Corp(NVDA)$ as Friday's exchanges were really intense.
After this drop on Thursday, the PUTs above 130 are in jeopardy of becoming in-the-money, meaning that the sellers (PUTs) will be the ones to take over the long side above 130.
"Taking Nvidia is fine, but doesn't really want to be above 130" is probably what most investors are thinking right now, so the pressure to close their positions, or the focus on Friday's session will be extremely high.
Another big thing on Friday was the rebanlencing day of passive funds, like $Technology Select Sector SPDR Fund(XLK)$ , particularly the $Apple(AAPL)$ and NVDA weight swaps would result in tens of billions of dollars in capital changes.
Theoretically, a passive fund would choose a concentrated point in time to make a position in order to stay in line with benchmark.
But this kind of tens of billions of dollars of sky-high volume is a huge blow to even a company like Apple, and if the market sentiment changes because of the position transfer (the price of the underlying stock changes, which in turn can lead to a change in the options), it defeats the purpose of the passive funds in the first place, and therefore they will inevitably not directly crash the market (of course, some degree of large orders will certainly be there, which will be observed and arbitraged by other institutions).
Options, the more liquid of the derivatives, also assume a role, so NVDA and AAPL are likely to see inexplicably large orders on Friday and will change investor expectations to some extent.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
