By Saqib Iqbal Ahmed
NEW YORK (Reuters) – Monday’s massive selloff in AI-darling Nvidia’s shares did little to blunt options traders’ enthusiasm for the chipmaker’s shares, with traders quick to pile back into bullish Nvidia contracts as the stock recovered on Tuesday.
Nvidia shares slumped about 17% or close to $593 billion in market value – a record one-day loss for any company – on Monday on worries sparked by a low-cost Chinese artificial intelligence model that threatens the dominance of U.S. rivals. The stock was up about 7% on Tuesday.
The selloff jolted investors long used to the stock climbing ever higher, but options traders were already seizing the opportunity to position for a rebound.
“It’s certainly been a speed bump for many but it hasn’t halted the activity,” said Steve Sosnick, chief strategist at Interactive Brokers.”
On Tuesday, call options, typically bought to express a bullish view on a stock, outnumbered put options 1.6-to-1, nearly in line with the 1-year average, after dipping to a more than two-month low of 1.36-to-1 on Monday.
“We’ve seen tremendous dip-buying,” Sosnick said.
Some 5.4 million Nvidia options contracts changed hands by 1:30 p.m. (1830 GMT), at nearly twice the usual pace, according to Trade Alert data.
Options traders had gotten extremely bullish on Nvidia and AI technology in general in the days leading up to the selloff with sentiment being helped along by last week’s announcement by President Donald Trump of a massive private-sector investment to build more AI data centers.
“There was just a lot of positional excess that created a lot of the volatility,” said Brent Kochuba, founder of options insights company SpotGamma.
With that out of the way Nvidia options trading was a lot more two-way balanced trading Kochuba said.
(Reporting by Saqib Iqbal Ahmed; editing by Megan Davies and Nick Zieminski)
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