To The Moon

As usual, will look to do call/put sell spreads - for Nvidia: Sell $NVDA 20241011 115.0 PUT$  + Sell $NVDA 20241011 130.0 CALL$ . For Tesla: Sell $TSLA 20241011 220.0 PUT$  + Sell $TSLA 20241011 270.0 CALL$ .

Last Friday's strong non-farm payrolls suggests the economy remains solid, supporting further upside in equities.

While Nvidia is showing signs of breaking above $130, and $131 is very viable, I expect a pullback before Friday.

The relentless stock strength is also boosted by institutions aggressively selling covered calls, almost blanketing the $120-$131 call strike range. As I've said, the direction doesn't matter - it's the density of nearby open interest strikes acting as magnets, luring the stock higher step-by-step. Institutions have effectively installed an escalator here.

Whether the stock can consolidate at these higher levels remains to be seen. Let's see if $130 can be held first.

While examining the option flows, I noticed an interesting phenomenon. Sorting Nvidia's ($NVDA$) new put option openings by size over the past 5 days reveals a concentration in deep out-of-the-money strikes, such as:

The $40 puts expiring March 2025 ($NVDA 20250321 40.0 PUT$ )
The $25 puts expiring January 2026 ($NVDA 20261016 25.0 PUT$ )

This isn't necessarily a negative, as most of these appear to be put spread sales, like selling the $80 put while buying the $50 put, or selling the $40 put while buying the $20 put. Very disciplined premium harvesting strategies.

A glance at the chart explains this caution - the volatility on these deep out-of-the-money puts is staggering, hence the need for safety spreads.

The outright $85 and $70 put buyers for this week's expiry are more like volatility lottery tickets rather than calculated bearish bets.

$iShares China Large-Cap ETF (FXI)$

Let's start with the ETF flows, as broad strength unlocks upside for individual names.

Looking at new unwinds, both KWEB and FXI saw much larger call opening than put opening over the past few days. As the FXI chart shows:

The strategies are similar to before - call spreads or covered call rolls. However, on October 3rd's pullback in FXI, we saw a wave of at-the-money straddle buyers as well as bearish calendar put spreads (selling front month, buying back month):

Sold $FXI 20241101 34.0 PUT$ 
Bought $FXI 20241115 34.0 PUT$ 
Total volume around 100,000 contracts. This represents a clearly defined bearish hedge, but the trader doesn't seem to expect a major crash before November.

On single stocks, noteworthy are the large outright at-the-money put buyers in Alibaba and Pinduoduo for this week's expiry:

$BABA 20241011 109.0 PUT$  (9,998 contracts), $BABA 20241011 120.0 PUT$  (6,655 contracts)

$PDD 20241011 145.0 PUT$  (10,000 contracts)

These outright institutional put buying flows suggest hedges are being put on for existing China long exposures this week.

Most surprising was the aggressive buying of long-dated at-the-money calls in UP Fintech ($TIGR 20250417 13.0 CALL$  13,700 contracts, $TIGR 20250417 12.0 CALL$  27,700 contracts). The thought process isn't wrong - exchanges likely biggest bull market beneficiaries - but such size is quite unusual.