The $NVDA 20240628 110 PUT$ continued seeing heavy buy flows. Correspondingly, the $NVDA 20240628 135 CALL$ saw two-way trading, suggesting retail participation.
To position for a potential pullback, the strategy is to sell calls and buy puts. Previously we often deployed the stock/call/put combo selling both sides, but now the put side has flipped to buying.
Personally, I'm even more reluctant to buy puts than calls, as my experience repeatedly selling puts has shown how philanthropic buying puts can be - just donating premium to the other side and lighting money on fire.
However, when hedges are warranted, you can't be stingy. Let's first get through these next two weeks.
The outlook for Nvidia remains bullish into July.
$VanEck Semiconductor ETF(SMH)$
Yesterday's option flows showed a new call spread initiation: Buying the $SMH 20240719 267.5 CALL$ while selling the $SMH 20240719 277.5 CALL$ .
Consistent with expectations for further upside in July, but capped below the prior highs.
Admittedly, selling the 195 calls last Friday may have been premature panic, but having stock helped offset it.
Unsurprisingly, there were institutional sellers of next week's $TSLA 20240705 205 CALL$ , establishing that as the new call selling strike.
These past few days, hot money seems to be playing a game of musical chairs, with Tesla and Apple being two of the last chairs investors are unwilling to vacate. So if we don't see a pullback over the next two weeks, sideways chop is likely.
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- KSR·06-27👍LikeReport