NVDA Large Call Spread: Insights and Analysis
NVDA‘s option trading has taken the lead, surpassing giants like TSLA and SPY, to become the most actively traded options by dollar value, reaching an impressive $2.7 billion. Our curiosity piqued, we turned to MarketChameleon’s advanced tool that specializes in parsing the trade tape and identifying multi-leg strategies.
Among the insights garnered, one particular call spread emerged as notably popular: the 22-Mar-24 885 : 890 call spread, expiring in just one day.
NVDA Multi-Leg Option Trade Analyzer
The Trade Breakdown
Source: MarketChameleon
This call spread was executed 40 times between 9:30 am and 2:52 pm. The Volume Weighted Average Price (VWAP) for this $5 spread stood at $4.44, indicating a robust interest level. What made this trading activity remarkable was its nature—not a singular large transaction, but a cumulative series of trades throughout the day.
This distribution suggests a growing volume, particularly towards the latter half of the trading period.
Exchange Dynamics and Price Variations
The spread’s journey across multiple exchanges, trading at various prices, highlighted potential liquidity challenges. Traders possibly navigated through multiple dealers across different exchanges, bidding up the price as NVDA’s stock value climbed, illustrating the strategic maneuvering required to fill these orders over time.
Historical Context
Source: MarketChameleon
MarketChameleon’s analysis revealed that this specific call spread has been a recurring trade in the market, trading nearly every day since March 4. Starting at $1.90 and ascending to $3.45 by March 20, this strategy showcased significant gains. The volume notably intensified on March 15, trading at a VWAP of $2.15, setting the stage for the recent surge in activity.
Looking Ahead
For the buyers of this spread to reap maximum rewards, NVDA’s closing above $890 on March 22 is crucial. Given the stock’s current position at $913 and with one day remaining, prospects seem promising for this limited risk strategy to yield significant returns amidst the stock rally.
Conclusion
Marketchameon‘s multi-leg trade analyzer helped highlight the 22-Mar-24 885 : 890 NVDA call spread, that might otherwise have remained obscured by the day’s extensive trading activity. This tool efficiently helped us monitor the spreads growth in both volume and price as the expiration approached.
This reveals insights into strategic opportunities that marry risk management with potential returns, highlighting the analytical depth required to uncover potentially hidden yet rewarding trading prospects.
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Originally Posted March 21, 2024 – NVDA’s Most Traded Call Spread
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Disclosure: Options Trading
Options involve risk and are not suitable for all investors. Multiple leg strategies, including spreads, will incur multiple commission charges. For more information read the "Characteristics and Risks of Standardized Options" also known as the options disclosure document (ODD) or visit ibkr.com/occ
Disclosure: Options (with multiple legs)
Options involve risk and are not suitable for all investors. For information on the uses and risks of options, you can obtain a copy of the Options Clearing Corporation risk disclosure document titled Characteristics and Risks of Standardized Options by clicking the link below. Multiple leg strategies, including spreads, will incur multiple transaction costs. "Characteristics and Risks of Standardized Options"
not sure this is so “limited risk” strategy. Of course risk is capped at the cost of spread but it is rather a high probability/low income/high risk spectrum given the buyer loses everything NVDA goes from 913 to 885. It is 3% but with this stock we have seen more.