To The Moon

The pullback has arrived again, but after Wednesday's shakeout, sentiment turned more optimistic ahead of TSM's earnings on Thursday.

$NVIDIA Corp(NVDA)$

There were an abnormally high number of "doomsday" option trades for this Friday's expiration, but that's understandable - positions need to be actively managed or rolled as the landscape shifts daily into expiration.

We first saw a large 30k lot buyer in the NVDA 20240719 133 calls on Friday, which was unwound on Tuesday.

Then on Tuesday, a massive 120,000 lots contract bearish put spread was initiated:

Buy $NVDA 20240719 119.0 PUT$ 
Sell $NVDA 20240719 115.0 PUT$ 

However, this position was already closed out by 10:30am on Wednesday as the stock dipped to $118 following ASML's earnings miss.

This close-out can be interpreted two ways: 1) The trade didn't expect further downside into Thursday's open, hence taking profit, or 2) Positioning for an eventual breach below $115, requiring fresh downside put spreads.

So far, no new large bearish flow has emerged at lower strikes, suggesting scenario 1 is more likely - that TSM's earnings won't lead to further downside follow-through, with Wednesday potentially marking this week's lows.

The unwinding of TSM's 182.5-170 put spread for July 26th expiry, along with some SPY bearish put spreads on Wednesday, also supports this view.

On Wednesday, a new bearish put spread initiated for August 9th expiry, implying a floor around $118:

Sell $NVDA 20240809 118.0 PUT$ 
Buy $NVDA 20240809 116.0 PUT$ 

Admittedly, the current technical setup is reminiscent of the April lows.

While the mid-week plunge seemed severe, I still expect Nvidia to close above $120 on Friday.

$Tesla Motors(TSLA)$

The recent range has been $240-270, and I expect Tesla to hold above $240 on Friday's close.

That said, I have noticed some protective collar trades from long holders to hedge against a potential blow-off top:

Buy $TSLA 20240920 220.0 PUT$ 
Sell $TSLA 20240920 315.0 CALL$ 

$Apple(AAPL)$

Expectations for Apple seem more subdued, likely due to its extended run. August put spreads are targeting a $210 floor:

Sell $AAPL 20240816 210.0 PUT$ 
Buy $AAPL 20240816 205.0 PUT$ 

Combined with the speculative call buying from Monday, a volatile pullback seems likely as we navigate earnings season.