From CNBC · Julia Spina · · 2m
Nvidia options cheap ahead of two catalysts
Nvidia's implied volatility has fallen to near its lowest level in a year, making options unusually cheap despite upcoming events that could move the stock.
In brief
Nvidia's implied volatility has fallen to near its lowest level in a year, making options unusually cheap despite upcoming events that could move the stock. Nvidia options are trading at unusually low prices despite two potential catalysts this month, presenting an opportunity for traders betting on significant stock…
Nvidia rallies but options stay cheap
Nvidia shares have surged twenty-four percent in twenty twenty-six and sit just three point five percent below their all-time closing high of two hundred thirty-five dollars seventy-four cents from May.
Two catalysts could move the stock
Nvidia CEO Jensen Huang is expected to attend a state dinner for Chinese President Xi Jinping when Xi travels to Washington to meet with President Trump this Thursday. AI is expected to be a main topic of discussion.
Micron earnings could ripple through sector
On September thirty, the following week, Micron is expected to report fiscal Q four earnings, a barometer for AI memory demand that may have ripple effects on Nvidia.
Implied volatility near year lows
Nvidia's implied volatility, derived from current options prices, is sitting near its lowest level of the past year. The market isn't pricing in much movement over the coming weeks.
The reverse iron condor trade
A trader is buying the October sixteen two hundred ten slash two hundred twenty put spread and the October sixteen two hundred thirty-five slash two hundred forty-five call spread for a total debit of roughly four dollars eighty-six cents.
Strategy bets on large move either way
This reverse iron condor is directionally neutral, structured to profit from a large move in Nvidia in either direction before October sixteenth. The position has a theoretical probability of profit of approximately fifty-six percent.
Breakeven requires five to six percent move
Breakevens sit at two hundred fifteen dollars fourteen cents and two hundred thirty-nine dollars eighty-six cents, meaning Nvidia needs roughly a five to six percent move from current levels by October sixteenth for the trade to turn a profit.
Semiconductor sector moves fast
The semiconductor sector has a proven, recent history of moving fast. On Monday, AMD surged more than nine percent to cross a one trillion dollar market cap and Intel and Arm each jumped double digits on renewed enthusiasm for AI chip demand.
The bottom line
Nvidia options are trading at unusually low prices despite two potential catalysts this month, presenting an opportunity for traders betting on significant stock movement.
