To The Moon

$NVIDIA Corp(NVDA)$

Institutional traders brought their weekly Nvidia call selling forward to Thursday, as higher stock prices translate to better premium sale levels.

Closing NVDA 20240809 115 Calls - 81,000 contracts
Rolling to Sell $NVDA 20240816 111.0 CALL$   - 81,000 contracts

Based on the 111 strike, institutions expect Nvidia's price to finish next week below $111.

As I mentioned previously, reclaiming $110 is the key resistance level for Nvidia's bounce to sustain.

With July CPI data releasing next Wednesday the 14th, there are two potential scenarios:

1. Nvidia trades sideways below $111 next week, pulling back to retest recent lows.

2. A volatile spike higher above $111 is met with an equally sharp sell-off, retesting lows before continuing to chop around.

Accounting for both scenarios, I continue to roll my call sale up to the $NVDA 20240816 115.0 CALL$  .

On the downside, I'll maintain put protection and avoid naked put sales for now, though spreads could present opportunities.

Theoretically, next Friday's close is likely around $100 given the heavy concentration in the 100 strikes for 8/16 expiry across calls and puts. But institutions repricing earlier in the week can't be ruled out.

Speaking of downside, institutions kept adding to bearish put spread positions yesterday:

Buying NVDA 20250221 76 Puts - 31,700 contracts
Selling NVDA 20250221 73 Puts - 31,700 contracts

Selling NVDA 20250221 74.5 Puts - 15,800 contracts
Buying NVDA 20250221 71.5 Puts - 15,800 contracts

Whether bullish or bearish, anchoring spreads at these lower strike levels is not an encouraging sign.

If institutions are actively hedging this type of downside scenario, I have to do the same by maintaining some protective put positions.

$Tesla Motors(TSLA)$

Tesla also saw its weekly call selling hit on Thursday:

Closing TSLA 20240809 220 Calls
Rolling to Sell $TSLA 20240816 207.5 CALL$  

While the opening trade prints suggest a bullish roll higher, the pricing fell between the bid/ask - leaving it neutral whether these were buy or sell orders.

More importantly, the concentrated size effectively caps next week's upside around that 207.5 strike, as Friday settlement tends to gravitate towards the heaviest open interest strike.

Similar interpretation as Nvidia's 111 level - with a high probability Tesla finishes next week below $207.50.

That 207.50 strike matches the August 2nd close, implying an inability to fully recover the August 5th gap down.

I'll take the more conservative side and Sell the $TSLA 20240816 215.0 CALL$  .

Projecting Tesla's downside next week is trickier, as the 8/16 150 Puts show up as the highest open interest, while 200 Calls are most concentrated for that expiry.

Looking out to the September and October monthlies, the highest open put strikes are all at 100.

The overarching expectation seems to be widespread downside participation, so little choice but to hold some protective put positions for now.