To The Moon

$Nvidia (NVDA)$

The pullback to the $140 area is nothing major, just a normal retracement.

There was even a notable covered call roll into higher strikes: $NVDA 20241220 170.0 CALL$ 

Since this $170 call trade printed as a "sell", it's another case of differing interpretations.

Looking at this trader's prior roll from October's $135 strikes to November $155 calls, I'm inclined to view this latest trade as maintaining their spread strategy by closing the $155 calls and rolling up to the $170 strikes for December expiration.

Of course, if you interpret it as an outright $170 call sale, that's fine too - just be sure to hold stock against any short call positions.

The pullback does present an attractive entry for selling puts. I've opted to sell the $130 puts expiring next week ($NVDA 20241101 130.0 PUT$ ).

As for Tesla, I haven't seen any noteworthy flows yet. Likely more rangebound between $200-$240, in which case tomorrow's dip could offer a put sale opportunity.

$SPY ETF (SPY)$

Speaking of covered call strategies, there was actually a large covered call trade in the $SPY$ ETF on Tuesday: Stock purchased alongside selling of the $SPY 20241220 610.0 CALL$ 

The implication is a moderately bullish outlook, expecting a gradual grind higher. But with the upcoming nonfarm payrolls report and then midterm elections, institutions may take a pause from aggressive positioning to await results.

This bodes for a period of range-bound chop, which allows premium sellers to capitalize on elevated time decay.

$Pinduoduo (PDD)$

An odd situation unfolded with Pinduoduo on Tuesday. Media outlets misreported Blackrock's holdings, sending the stock and options soaring initially. There was a quick buyer of 19,700 contracts of the weekly $140 calls ($PDD 20241101 140.0 CALL$ ).

About an hour later, the news was clarified as an error and PDD's stock retraced back to prior levels.

I noticed the unusual options flow but passed on joining. With FXI and KWEB ETFs showing no abnormalities, it seemed an isolated PDD event - hard to judge if it was a legitimate long-term catalyst or just a brief overreaction.

That's oftentimes the predicament with option buying - the entry can seem straightforward, but timing the exit is incredibly difficult unless you embrace a pure momentum mindset.

Awkwardly, that $140 call buyer still hasn't closed their position. I wish them luck - perhaps another positive catalyst emerges like a big rebound in Chinese equities next week. Or maybe this was all an elaborate headfake. You never know in this game.