Behind the Heavy NVIDIA Stock Options Volume

Options trading has been extraordinarily heavy on artificial intelligence (AI) specialist NVIDIA Corporation (NASDAQ:NVDA) in recent weeks, with calls particularly popular as the chip stock carves out new highs. Here's a closer look at how options traders have been placing their bets on NVDA.

The 20 stocks listed in the table below have attracted the highest total weekly options volume during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.

NVIDIA Stock Trades Near Historically Bullish Trendline

NVDA shares gapped to a record higher of $191.20 earlier this month, after optimism surrounding the company's AI prospects sparked price-target hikes for the stock. Since then, the equity has pulled back to the $170-$174 region -- last seen at $174.80 -- near its 40-day moving average.

According toWhite, in the past 11 times NVDA has come within one standard deviation of this trendline after a lengthy stretch above it -- looking back on three years' worth of data -- the short-term trading results have been positive. Specifically, NVDA stock has averaged a 21-day gain of 10.1%, and has been positive 70% of the time.

NVDA Call Options Have Been Popular

Options traders, meanwhile, have shown a distinct preference for calls over puts in the past two weeks, with 152,000 of the former and 99,000 of the latter exchanged. A significant amount of this recent call volume has centered at the weekly 9/29 180-strike call, which is now home to peak open interest of 10,763.

Data shows a mix of buy- and sell-to-open activity at this strike, which sits about 2.8% above current trading levels. Those purchasing the calls expect NVDA to break out above $180 by expiration at tomorrow's close, while those writing the calls are betting on $180 serving as a short-term ceiling.

Looking ahead to the weekly 10/6 series, peak open interest of 3,641 contracts is found at the near-the-money 175-strike call. The major options exchanges show most of the calls were bought to open, with these traders expecting NVDA stock to hold near its record highs through next Friday's close.

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