$Nvidia (NVDA)$ traders are rolling their call spread positions too?
Buying $NVDA 20241018 119.0 CALL$
Selling $NVDA 20241018 126.0 CALL$
Funds closed their $115-122 call spread opened on 9/9 and rolled it higher to the $119-126 strikes, likely after Nvidia gapped up 8% to $116.90 and achieved the initial upside target.
However, the $113 covered call position from last week remains open. Based on open interest, we'll likely see another tug-of-war play out around the $110 level next week.
On Wednesday, there was a 14,000 contract opening put sale in the $SOXL 20260116 10.0 PUT$ for around $2 million in premium collected.
The strategy seems sound in theory - a conservative long-term bullish view on semiconductors, but only "having a taste" for a 12% annualized yield.
The bigger issue is with this leveraged ETF product itself. If you have over 10 years' trading experience, you've likely witnessed plenty of these 3x levered ETFs getting closed down over time. The underlying holdings simply can't withstand the same levels of volatility and drawdowns as single stocks. So it's hard to judge whether this trade is truly aggressive or conservative.
Following that same put sale logic, one could sell the $NVDA 20260116 70.0 PUT$ for a 6.4% annualized yield instead.
While the major indices are riding the coattails of tech strength, index option flows remain defensive. Yesterday's biggest block in $SPY$ was another bearish put spread:
Buying $SPY 20241018 527.0 PUT$
Selling $SPY 20241018 514.0 PUT$
Any bullish $SPY$ positioning remains front-month, with no discernible upside call buying for later-dated expirations.
$QQQ$ also saw defensive put spread flows:
Buying $QQQ 20240927 445.0 PUT$
Selling $QQQ 20240927 425.0 PUT$
It's interesting to see such divergent expectations between tech names and the broader indices. Perhaps implying any potential "shock" would have to be recessionary in nature, which could make the AI-leveraged cohort like Nvidia more of a safe-haven destination for capital in that scenario.
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