Option investments betting on a rise in NVIDIA stock prices are on the rise ahead of the earnings announcement of NVIDIA, a leading artificial intelligence (AI) beneficiary.
Citing data from Cboe Global Markets, the Chicago Option Exchange (Cboe), the U.S. daily Wall Street Journal (WSJ) reported on the 22nd (local time) that Nvidia option investment exceeded USD 100 billion by the middle of this month, about 60% of which is related to call options betting on rising stock prices.
Options are the right to buy or sell certain assets at a predetermined price by a certain date (expiration) in the future, while call options are the right to buy assets in anticipation of price increases, while put options are the right to sell them in anticipation of price drops.
As of January 3, Nvidia remaining call and put options were 1.395 million contracts and 1.361 million contracts, respectively, but as of the 21st of this month, it has increased to 1.787 million contracts and 1.81 million contracts, respectively.
The most active product on the 22nd was the option to benefit from the current stock price of $456.68, which is $500, and some investors are also watching for the possibility of reaching $600 or $700.
NVIDIA’s stock price, which produces graphics processing units (GPUs) necessary for generative AI operations, has risen about 212% this year, the highest increase among S&P 500 listed stocks.
In particular, after releasing a better-than-expected earnings forecast, the market capitalization rose 24.37% on May 25 alone, increasing nearly $184 billion.
According to a survey of 50 analysts in charge of NVIDIA conducted by financial information company FactSet, everyone expected a rise in stock prices again this time, and some predicted that the average price target is around $537 and $1,000.
With Nvidia announcing its earnings after the market closed on the 23rd, some say it is trading options with the so-called Fear of Missing Out (FOMO) sentiment, which investors fear will be alienated from a surge in stock prices after the earnings announcement.
It is observed that Nvidia’s announcement of its performance will also serve as a test of the rise in the stock index due to AI.
While tech stocks have led the stock index’s rise this year, new favorable factors are needed for a stock market rally as the recent rise in bond rates is considered to be factors that limit the stock price’s rise.
