A trader who bet against Nvidia (NVDA) in the options market Tuesday appears to have made more than $6.5 million as shares of the AI darling slumped. Early Tuesday, 60,000 contracts of a $119/$115 put spread were bought for a total cost of about $1.23 million. The buyer was betting on shares dropping below $119 by Friday, while lowering their cost — and capping potential gains on a selloff — by selling the lower-strike option. For the trade to expire “in the money” — that is, worth something — shares would need to dip almost 6% from Tuesday’s close.
The trade was quickly rewarded, as Nvidia dove as much as 6.5% to below $119 early Wednesday along with other chipmakers amid the threat of tougher US restrictions on chip sales to China. Nvidia and other tech giants have led the broader market gains this year, and the selloff Wednesday took the S&P 500 down more than 1%.
Market Overview:
- Nvidia slumped as much as 6.5% early Wednesday.
- Other chipmakers also faced declines.
- S&P 500 fell more than 1% due to the selloff.
Key Points:
- Trader made more than $6.5 million from put spread trade.
- Put spread trade involved 60,000 contracts of $119/$115.
- US restrictions on chip sales to China impacted the market.
Looking Ahead:
- Potential for further market volatility due to US-China tensions.
- Monitoring other tech giants for similar movements.
- Investor sentiment remains cautious.
Early in Wednesday’s session, about 58,000 of the same spreads changed hands in a single block for about $7.83 million. While there’s no way to tell for sure from the screen if it was the same investor, market participants said the trade appeared to be closing a position.
So, if it was the same trader, they pocketed more than $6.5 million in total.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
