NVIDIA’s AI Passion Fuels US Options Market Bets

(CTN News) – There is growing NVIDIA enthusiasm among investors for all things related to artificial intelligence, which is reflected in the U.S. options market, as traders pile into derivatives bets to gain exposure to this hot investment theme that is all the rage right now.

A report by Reuters from Trade Alert shows that 25 cents out of every dollar of premium – the price of contracts – traded in U.S. options on artificial-intelligence darling Nvidia (NVDA.O), opens new tab.

According to a Reuters analysis of Trade Alert data, nearly $3 billion worth of options premium were traded in the chipmaker’s options every day on average over the past month, with nearly $3 billion in premium traded every day.

It was recently observed that Nvidia (NVDA.O) was the most heavily traded name for the day on the option market, overtaking Tesla (TSLA.O) during several recent sessions.

As a result of insatiable demand for its chips, which feature prominently in the generative AI craze, Nvidia briefly exceeded $2 trillion in market value on Friday – just two days after it released quarterly earnings – as it briefly hit $2 trillion in market value for the first time.

In terms of market capitalization, Nvidia recently ranked as the third-largest company on the U.S. stock market. There is no doubt that its shares dominate the S&P 500 (.SPX) due to the fact that they make up 4.5% of its weighting, giving them a significant influence on its movements.

Nvidia’s options are likely to remain popular with traders, “both from a hype and from a mechanical index perspective,” according to Garrett DeSimone, the head of quantitative research at OptionMetrics. The company represents such a significant percentage of the weighting of the S&P 500 index.

A wide range of bets have been placed on the stock’s options, ranging from those guarding against the possible fall of the stock toward $350 by March to those that would bear fruit if the stock continued its meteoric rise toward $900 in the next few months and even higher.

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