Nvidia Corp. (NASDAQ: NVDA), the chipmaker at the heart of the AI boom, saw its shares drop to a three-week low on Thursday, as concerns over its growth outlook weighed on investor sentiment. In a striking move, a trader placed a massive options bet against Nvidia, signaling expectations of a deeper selloff in the coming days.
Bearish Options Trade Predicts 12% Drop for Nvidia
Between 2 p.m. and 2:40 p.m. on Thursday, a trader purchased more than 300,000 put contracts, betting that Nvidia’s stock would fall to $115 by March 7—a move that implies a 12% decline from Wednesday’s closing price.
🔹 This was the most-active options contract on U.S. exchanges Thursday.
🔹 Put volume surged to more than twice the 20-day average, according to Bloomberg data.
🔹 In the final 30 minutes of trading, another 100,000 put contracts were added, potentially signaling profit-taking by the same trader.
The last time NVDA traded at $115 was mid-September, meaning this bet reflects a bearish outlook amid concerns over Nvidia’s near-term performance.
Why Are Investors Turning Cautious on Nvidia?
Nvidia’s recent earnings report delivered solid results, but investors were left disappointed by the lack of an explosive beat—something they had grown accustomed to during the AI-driven rally.
📉 Post-Earnings Selloff: Following its earnings release, Nvidia shares dropped nearly 3% on Thursday, marking its worst session in a month.
📊 Rising Implied Volatility: The options trade caused implied volatility on Nvidia’s puts to spike by 8 points, according to Chris Murphy of Susquehanna International Group.
🏛 Macroeconomic Events Ahead: The put buyer’s trade aligns with upcoming catalysts, including:
- State of the Union Address
- Non-Farm Payrolls (NFP) jobs report next week
What’s Next for Nvidia?
With Nvidia’s stock already seeing elevated volatility, this bearish trade adds another layer of uncertainty.
📉 Technical Weakness: The stock’s recent dip could invite further selling pressure if investors take cues from the options market.
💰 Profit-Taking Risk: Given Nvidia’s massive AI-fueled rally, some investors may lock in gains, contributing to near-term downside risk.
📈 Long-Term AI Outlook Still Strong: Despite short-term concerns, Nvidia remains a dominant force in AI and data center computing, meaning any pullback could present a buying opportunity for long-term investors.
Final Thoughts: A Short-Term Dip or a Deeper Correction?
With options traders betting against Nvidia, investors will be watching closely to see if the stock stabilizes or extends its losses. While the AI boom remains a long-term growth driver, near-term volatility could continue as the market digests earnings results, economic data, and upcoming macro events.
Will Nvidia bounce back, or is this the start of a broader correction? Traders and investors alike will be watching price action in the coming sessions to see if the bearish bet plays out. 🚨📊
