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    Volatility Escalates As Nvidia Options Approach Expiry Date

    The stock market witnessed considerable volatility during Thursday’s trading period, predominantly owing to the significant influence of Nvidia Corporation on semiconductor equities and the approaching termination of a substantial volume of options contracts.

    This phenomenon, widely known as “triple witching,” consists of stock index futures, stock index options, and stock options all expiring concurrently on Friday. With about $5.5 trillion on the line, according to data from options analysis firm SpotGamma, this event may notably boost market fluidity as investors recalibrate their holdings.

    Investors are vigilantly monitoring the activity around Nvidia Corporation (NVDA), observing a surge in bearish option trades preceding the expiry of these contracts. FactSet’s statistics reveal intense action in Nvidia’s put options, particularly at the $135 and $130 price levels, which attracted 365,000 and 250,000 contracts respectively. This pivot to put options has seen Nvidia’s ratio of puts to calls ascend to 0.70 from 0.58 in just seven days.

    In terms of technical analysis, the stock price of Nvidia leaped above $140 early Thursday, doubling its 200-day moving average – a sight not witnessed since 2024, according to Dow Jones Market Data. Though historically, crossing such a significant level may suggest an impending price descent, past performance shows that Nvidia’s stock often experiences a rally, with a 62.3% chance of climbing in the subsequent month.

    Technical analyst David Cox from Raymond James identified a “bearish engulfing” pattern on Nvidia’s chart for Thursday, indicating potential retracement in the share price following a sustained uptrend.

    Anticipation builds as the upcoming expiry looms, predicted to be the largest to date, leaving Nvidia’s options in the spotlight amidst preparations for expected disturbances in market stability.

    Image Source: JRdes / Shutterstock

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