Nvidia, Intel call buyers defy the dip in chip stocks

Semiconductor stocks are on the verge of posting their biggest down day since March 30, as a huge early rally in Qualcomm completely reversed after the opening bell. The VanEck Semiconductor ETF (SMH) is now down about 1%, but call buyers in at least two key chip stocks are looking for further gains.

One of the biggest trades in the group this morning is a $2.2 million purchase of 2,168 $210-strike calls in Nvidia that expire May 15. Those are at-the-money contracts that pay off with further upside in the AI leader, whose shares just touched a new all-time high of $212.65.

Calls are outpacing puts more than two-to-one in Nvidia options, and call premiums account for more than 80% of value traded. With earnings about a month away, volatility in the stock is still slightly cheaper than in SMH.

Bulls look resilient in Intel as well, where call volumes and premiums outpace puts after a blistering 100% run off last month’s lows.

And it appears one trader is betting the stock goes for an even wilder ride. Specifically, they created a lopsided call spread, where they sold 3,000 of the $60-strike calls expiring June 18 and used that money to buy 10,000 of the $95-strike calls expiring the same day.

The trade will lose money if Intel’s under $108 by expiry, but the value of the 10,000 calls bought could increase quickly if volatility picks up further in the stock — something we see frequently when retail traders get a hold of a new favorite.