To The Moon

$NVIDIA(NVDA)$

Today's options opening data revealed something interesting. Institutions expect NVIDIA's stock price for the week of December 20 to be lower than the market consensus. Institutions expect it below 141, while open interest data shows market expectations between 140-150:

Sell $NVDA 20241220 141.0 CALL$ 

Buy $NVDA 20241220 149.0 CALL$ 

The overall market expects NVIDIA to likely trade between 140-150 during December 20 week, while institutions expect it below 141, with a small chance of 141-149.

When such contradictions arise, which side is more credible? From a sensitivity perspective, overall options open interest adjusts more slowly than institutional movements - like comparing one sheep turning versus an entire flock. Institutions might have observed some bearish indicators early, leading to their bearish positioning.

However, going against the crowd has its risks - we've seen institutions forced to cover their short call positions several times this month.

So with institutions persistently trying to pressure the stock, how far might NVIDIA fall?

Thursday's large options trades show floor traders joining the short side:

Sell $NVDA 20250117 170.0 CALL$ , floor trade, volume 45,500 contracts, premium $2.5M

This naked call expires January 17 next year at strike 170. While it might not seem aggressive, the trader shows sophisticated shorting experience. As shown above, the primary concern in selling calls isn't premium collection but avoiding margin calls.

Especially with positions over 10,000 contracts, their mere existence affects stock price - which explains why the institution mentioned above keeps getting squeezed.

Looking at Thursday's options activity, next week's 90 puts saw increased opening positions expecting volatility surge, with bearish focus still around 130, though notably 115 puts are also gaining traction.

December 20 open interest details show wide market expectations disparity, understandable for monthly options carrying full-year price expectations.

NVIDIA wasn't the only short squeezed this week; Microsoft short calls were also forced to cover $MSFT 20241227 465.0 CALL$ :

$COIN$

If next week brings a broader pullback, Bitcoin will likely follow. Institutions rolled to lower strikes for next week (335 vs 342.5) but with higher hedge points:

Sell $COIN 20241220 335.0 CALL$ 

Buy $COIN 20241220 385.0 CALL$ 

For next week's strategy, I plan to follow institutions: NVIDIA sell call $NVDA 20241220 141.0 CALL$ , holding off on sell puts until Monday to see Friday's positions.

Tesla sell call $TSLA 20241220 480.0 CALL$ , requiring a buy call leg for spread due to naked selling risk, but smartly buying $TSLA 20241220 500.0 CALL$  cheaper at next week's open.