After reviewing the opening position data, I suspect there might not be a pullback in December.
On Wednesday, institutions made large-scale rolls of their bull spreads. All December 6 call options were closed, with strike prices uniformly adjusted up by about $5. The concentrated opening range for December 13 calls shifted to 147-157.
Unless the stock price returns to 140 by Friday, I feel next week's short squeeze could still keep NVIDIA at high levels.
On the put side, there are concentrated openings in 141-144 puts, with $NVDA 20241206 141.0 PUT$ showing large-scale put selling. However, as we've mentioned before, opening weight is direction-neutral, and heavy put openings can restrain stock price increases.
Overall, NVIDIA looks set to close between 140-150 this week.
The large sell call position from earlier this week $MSFT 20241213 420.0 CALL$ got heavily squeezed, forcing institutions to close positions on Wednesday.
Due to various factors causing breakthrough rises, Wednesday saw many new large bullish orders for MSFT, both call buying and put selling.
The call buys are all long-dated options (over six months), with strike prices at 515 and 440:
Buy $MSFT 20250815 515.0 CALL$
Buy $MSFT 20250516 440.0 CALL$
The large put sell orders chose in-the-money 445 strikes, expecting to profit from any upside while being content with sideways movement:
Sell $MSFT 20241220 445.0 PUT$
However, I currently believe the bullish momentum is more due to short squeezing. I prefer NVIDIA for bullish positions because of more short positions (sell calls) next week, indicating higher squeeze potential. An aggressive play would be selling 140 puts $NVDA 20241213 140.0 PUT$ .
Based on NVIDIA's current opening positions, the price expectation remains around 140 until December 20, suggesting we might see a delayed pullback situation similar to June-July. This could mean a major pullback in January or February, similar to early August.
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