To The Moon

Nvidia's earnings performance was largely in-line with expectations. The lack of a bigger rally is a bit of a disappointment, but even if it had spiked to $135, a pullback was inevitable. However, the more concerning aspect is that without Nvidia leading the charge, the broader market likely won't make new highs ahead of next week's nonfarm payrolls release. The traders who sold $SPY$ 570 calls probably dodged a bullet there. On Wednesday, institutions preemptively rolled their covered call positions in tech names - an unusually early adjustment compared to the typical Thursday/Friday roll execution. This likely signals Wednesday was the near-term top for equities. Furthermore, the strike selections on these rolls were taken down a notch. $Tesla (TSLA)$ had 225 calls overwritten this week but rolled to the $TSLA 20240906 215.0 CALL$ for next week. $Coinbase Global, Inc. (COIN)$ saw two different institutions with 215 and 217.5 call overwrites this week, rolling to the $COIN 20240906 207.5 CALL$ and $COIN 20240906 205.0 CALL$ respectively. Nvidia will likely see institutions roll their call overwrite today as well, with a new lower strike covered call to follow next week. I'll look to take profits on my $NVDA 20240830 115.0 PUT$ overwrite on the open, with 110 as the expected floor for the remainder of the week. In $SPY$, Wednesday's activity showed institutions buying put spreads, mostly centered on the 540-550 strike range, essentially hedging ahead of next Friday's payrolls report risk. For $Pinduoduo (PDD)$, there was a 10,300 contract buyer of the $PDD 20241220 65.0 PUT$ yesterday. While the long-dated expiry gives this trade time to work, a drop all the way to 65 seems excessive in my view - something like 80 feels more reasonable as a potential capitulation level.