Nvidia bets dominate US options market as AI fervor grows
By Saqib Iqbal Ahmed
NEW YORK (Reuters) — Investors' fervor for all things AI-related is leaving its mark on the U.S. options market, as traders pile in to derivatives bets to gain exposure to the red-hot investing theme.
Options on artificial-intelligence darling Nvidia (NASDAQ:NVDA) accounted for 25 cents of every dollar of premium — the price of contracts — traded in U.S. single-stock options over the past month, nearly $3 billion in options premium traded in the chipmaker's options every day on average, a Reuters analysis of Trade Alert data showed. During several recent sessions, Nvidia surpassed Tesla (NASDAQ:TSLA) as the option market’s most heavily traded name for the day.
Nvidia briefly hit $2 trillion in market value for the first time on Friday — two days after it released quarterly earnings — riding on insatiable demand for its chips which feature prominently in the generative AI craze.
Nvidia recently became the third-largest U.S.-listed company as measured in market capitalization. Its shares command a weighting of 4.5% in the S&P 500, giving them an outsized influence on the broader index's moves.
Nvidia's options should remain popular with traders, «both from a hype and mechanical index perspective,» said Garrett DeSimone, head of quantitative research at OptionMetrics. «It represents such a large portion of S&P 500 weighting.»
The stock's options have drawn a range of bets, including ones guarding against a drop in the stock toward $350 by March and others that would bear fruit if the stock extended its meteoric rise toward $900 and higher in coming months.
Nvidia shares were up 1.4% at $798.90 on Monday afternoon.
A host of other AI names has also drawn heavy options volume, including Super Micro
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