To The Moon

Last week, we discussed a mysterious trader who systematically sweeps up large call option positions in $Nvidia (NVDA)$, with trade sizes and premium outlays that are massive - often taking over 20 minutes to get filled. This trading style is uncharacteristic of typical institutional flows, so we've dubbed him the "Sweep Guy."

On Wednesday, the Sweep Guy was back at it again:

$NVDA 20241025 150.0 CALL$ 

These $150 calls expire next week (10/25). He traded a whopping 104,800 contracts, with 84,000 in new opening volume. The orders were worked from 12:54pm to 1:23pm, a lengthy 30-minute window.

Based on trade pricing, our analysis indicates the Sweep Guy was a seller of these $150 calls, essentially betting that Nvidia shares will not exceed $150 by next weekly expiration.

Capping Nvidia below $150 next week seems like a reasonable expectation. However, the institutional trader who typically rolls their covered call positions has yet to do so. If they decide on an aggressive near-the-money call spread for next week, a breakout above $150 can't be ruled out.

We'll need to monitor Friday's closing levels. Currently, the largest call open interest strikes reside at $138, $140, and $145. Both $138 and $145 appear to be institutional call spreads. A close below $138 today keeps a lid on. But a close near $140 likely targets $145 by Friday's expiration.

For next week's option trades, it may be prudent to wait and let the institutional trader roll first before considering any call sales against their highest upside strike. Put sales could initially look at $125 or $130 strikes depending on the trader's roll levels.