Hunt for ‘next Nvidia’ draws options traders to Arm’s soaring stock
By Saqib Iqbal Ahmed
NEW YORK (Reuters) — The craze for artificial intelligence stocks sent options traders piling into bets on Arm Holdings (NASDAQ:ARM) on Monday, with many positioning for more gains in the shares after they almost doubled in price in less than a week.
Arm Holdings' shares are up 80% since Wednesday, after the company forecast better-than-expected quarterly results powered by demand for its technology to design chips for artificial intelligence features.
The jump in the stock price has ignited trading in the chip designer's options, with volume soaring to about 490,000 contracts a day over the last three sessions. That is more than 10 times the options' average daily trading volume in the month prior to the earnings report, according to Trade Alert data.
The exploding options volume pointed to investors hunting for the 'next NVIDIA,' said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, noting that the surge in bullish options activity was likely helping boost the stock.
Chip heavyweight Nvidia (NASDAQ:NVDA), at the center of the artificial intelligence frenzy, has risen about 220% over the last year, making it the best performing S&P 500 stock for that period.
On Monday, 600,000 Arm contracts changed hands by 2:15 p.m. (1915 GMT), with the day's volume projected to hit a record 816,000 contracts, data showed.
With Arm shares up 20% at $137.72 on Monday, call options on the shares rising above $185 by Friday were the most actively traded Arm contracts. Call options convey the right to buy shares at a set price in the future, while puts offer the right to sell shares.
Arm's share price rise has made for massive gains for recent bullish options bets. For instance a trader
Read more on investing.com
