Nvidia Options Analysis

US Yield Curves and Tracker Updates

Nvidia earnings are on Wednesday, let’s take a look at the options skew by looking at the cost of the ATMs of the 3 day expiration options. Let’s use a strike of $457.50, the Calls are priced at $24.70, so this implies a 5.3% move higher for breakeven. When we look at the same strike Put we have a price of $25.40 or a down move of 5.6% for breakeven. As far as the straddle owning both, will cost you $50.10 or a breakeven of $507.60 on the calls and $407.40 on the puts. Then when we look at the open interest across the Calls and Puts. Here are the open interest numbers at the specific strikes:

460 Calls = 132056, 480 Calls = 30,275, 500 Calls = 19,122

460 Puts = 5,048, 450 Puts = 3,824, 440 Puts = 4,752, 420 Puts = 10,412

Obviously the skew is heavy on the calls and we would suspect that the market if it does move higher off the numbers that sellers will be there to offset a lot of this. (Barchart data)

As far as Nvidia’s chart, we do not like the look of it, could it push higher sure, but it would be a moment euphoria blow off top. The fundamentals moving forward do not warrant or justify the multiples here from our purview:

The October $350/300 put spread is $4.14, if bearish this looks like a decent risk reward play with 2 months to expiration if this is indeed a top. Risk $4.14 to make $50 or a 12:1 payoff.

Nvidia has held up the best over the last few weeks during this recent selloff and its evident in our next chart here: