Semiconductor Stocks Suffer Worst Day Since March as Qualcomm Rally Reverses; Nvidia Options Activity Surges
Nvidia call buyers bet on further gains despite AI leader hitting record high; Intel sees 100% rally off lows with aggressive options play
Quick Look
- Semiconductor stocks are on track for their biggest down day since March 30, with the VanEck Semiconductor ETF (SMH) down about 1% after an early Qualcomm rally reversed.
- Despite the broad decline, options activity remains bullish in Nvidia, where a $2.2 million purchase of 2,168 at-the-money $210-strike calls expiring May 15 was executed as shares touched a new all-time high of $212.65.
- Call volume outpaces puts more than two-to-one in Nvidia.
AI-generated summary
Why It Matters
Semiconductor stocks have been on a strong run with Nvidia leading the AI chip sector to new highs. The sector experienced a significant pullback, marking the biggest down day since late March. Despite the broad decline, options markets show continued bullish sentiment in individual names, particularly Nvidia and Intel.
Semiconductor stocks are on the verge of posting their biggest down day since March 30, as a huge early rally in Qualcomm completely reversed after the opening bell. The VanEck Semiconductor ETF (SMH) is now down about 1%, but call buyers in at least two key chip stocks are looking for further gains.
One of the biggest trades in the group this morning is a $2.2 million purchase of 2,168 $210-strike calls in Nvidia that expire May 15. Those are at-the-money contracts that pay off with further upside in the AI leader, whose shares just touched a new all-time high of $212.65. Calls are outpacing puts more than two-to-one in Nvidia options, and call premiums account for more than 80% of value traded. With earnings about a month away, volatility in the stock is still slightly cheaper than in SMH.
Bulls look resilient in Intel as well, where call volumes and premiums outpace puts after a blistering 100% run off last month's lows. And it appears one trader is betting the stock goes for an even wilder ride. Specifically, they created a lopsided call spread, where they sold 3,000 of the $60-strike calls expiring June 18 and used that money to buy 10,000 of the $95-strike calls expiring the same day.
Open Questions
- What triggered the Qualcomm rally reversal?
- What is the broader market sentiment driving semiconductor selloff?
- Will Nvidia earnings meet elevated expectations?
