Semiconductor stocks are experiencing their largest decline since March 30, with the VanEck Semiconductor ETF (SMH) down about 1% after an early rally in Qualcomm reversed post-opening bell [1]. Despite this sector-wide dip, options activity in Nvidia and Intel indicates bullish sentiment among traders [1].
A notable trade in Nvidia involved a $2.2 million purchase of 2,168 $210-strike calls expiring May 15, which are at-the-money contracts that would profit if Nvidia's stock continues to rise. Nvidia shares recently reached a new all-time high of $212.65. Options data shows calls are outpacing puts by more than two-to-one, with call premiums making up over 80% of the value traded. Volatility in Nvidia remains slightly lower than in SMH, even as the company's earnings report is about a month away [1].
Intel is also seeing strong bullish options activity, with call volumes and premiums surpassing puts following a 100% rally from last month's lows. One trader executed a lopsided call spread, selling 3,000 $60-strike calls and buying 10,000 $95-strike calls, both expiring June 18. This trade will lose money if Intel is under $108 at expiry, but could gain significantly if volatility increases, a scenario often seen when retail traders focus on a stock [1].
CONCLUSION
Despite a sector-wide pullback in semiconductor stocks, options traders are positioning for further upside in Nvidia and Intel, as evidenced by large call purchases and complex spread strategies. This suggests continued bullish sentiment and expectations of increased volatility in these leading chip stocks.