A large investor appears to be buying protection on holdings in Nvidia as shares hover near four-year highs.
optionMONSTER's Depth Charge system detected the purchase of 11,104 May 19 puts for $0.23 to $0.26 in 15 minutes Friday afternoon, including one print of 10,100 that went for the highest price. Open interest in the strike was a mere 208 contracts before the trade appeared, showing that it is a new position.
Long puts lock in the price where the stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be purchased as a speculative bearish bet, the Nvidia puts could well be the work of an investor hedging a long position with the stock trading at elevated levels. (See our Education section)
NVDA rose 0.13 percent to $22.70 on Friday and is up more than 13 percent on the year. The graphics-chip maker gapped up from below $21 after reporting quarterly results on Feb. 12 and reached $23.30 last Wednesday, its highest intraday price since March 2011.
Total option volume in the name topped 21,600 contracts on Friday, triple its daily average for the last month. Nvidia's put/call ratio was 16.5 to 1 based on the session's big trade.
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