To The Moon

The Jul 31 close was very encouraging, with SPY also seeing some bullish flows like:

Buy SPY 20240920 565 Calls
Sell SPY 20240920 585 Calls

However, $SPDR S&P 500 ETF Trust(SPY)$ is still predominantly trading in bearish put spreads, as pullbacks are expected after such a ramp.

The market's main discussion is centered around how low we could go, rather than how high we could rally - indicative of an overall defensive/bearish positioning.

So what did $NVIDIA Corp(NVDA)$ options look like after Wednesday's monster rally?

This week's call options saw heavy closing, while puts saw fresh initiations. Most of the put flow took the form of put spreads, with the highest volume trade being:

Buy NVDA 20240802 119 Puts
Sell NVDA 20240802 117 Puts

Not surprising for traders to position for a pullback after the rally.

The two most notable longer-dated option trades mirrored the activity from July 25th:

Close NVDA 20240816 127 Calls
Open NVDA 20240920 115 Calls

Close NVDA 20240816 110 Puts
Roll to NVDA 20240920 90 Puts vs NVDA 20240920 120 Calls vs short NVDA 20240816 110 Puts

I didn't specify direction on those last two, as the buy/sell sides differed from July 25th. But data showed new opening trades, so will hold off drawing any conclusions for now. There are other large trades beyond just those two.

As I type, we're seeing that pullback materialize. I can't help but think that the Aug 23rd expiry on yesterday's 115/125 call spread made sense.

Long-time readers may recall my note on July 19th about sizeable buying of the NVDA 100 puts. My gut tells me those were likely some of the dip-buyers yesterday.

They may have also been involved during the May 19th capitulation, even if not on that Friday. These fast money crews tend to hit and run around bigger market pivots.

So I'm not too concerned about Nvidia's near-term price action now. The 100 level will likely remain very solid support this quarter. Good spot to sell some weekly puts on Friday's session.

AMD is pulling back again, not too surprising given the beatdown it has endured. But as long as Nvidia holds up, so should AMD.

$Microsoft(MSFT)$

For Microsoft post-earnings, we saw a typical strike roll lower:

Close MSFT 20240816 440 Calls
Open MSFT 20241115 405 Calls

A sigh-worthy development, as the opening interest plunged from 64,000 to just 28,000 contracts - implying this institutional spread took a beating.