Nvidia Flows - Counting down to the end of the party
As NVDA 0.00%↑ moves higher on the back of the AI frenzy - with a rally of over 85% this year - things may start to slow down approaching April OpEx. It’s hard to believe a company can be listed at 20x revenues in an environment of high interest rates. However, here we are with TTM revenues around 22B and a Market Cap of 675B.
Nvidia has been a constant member of the top 10 tickers by options volume according to the OCC, along other big names such as TSLA 0.00%↑ , AAPL 0.00%↑ and MSFT 0.00%↑ .
Nvidia is now at a price where most of the Put OI is OTM and a big part of Call OI is ITM. But what are the implications?
As the GTC ends and as we approach April OpEx - Charm flows will start to negatively pressure the stock price. Considering the FED stance of “higher for longer” we might be up for a downward slope ride in NVDA 0.00%↑ share price - the typical elevator down situation.
There are two main ways one may be able to extract value from a setup like this. The diagonals have the most interesting risk-reward in my opinion.
Short Put - GTC week
Long Put - Post GTC week
buy the rumor sell the news.
Or.. considering we are so close to the end of the GTC week and the credit associated to the Short Put sale is already residual you can also consider:
Short Put - April 6th
Long Put - April 21st
By doing a Calendar like this you are capitalising with the strong negative charm flows as we approach April OpEx. The risk reward is extremely atractive in my opinion.
However, you should do your own analysis before investing. This is not investment advice it is only my opinion.