Chip Stocks Slammed, But Nvidia Options See Massive Bullish Bets — Is the Awakening Here?

U.S. technology stocks fell sharply on Tuesday (7th), with chip stocks tracked by the VanEck Semiconductor ETF (SMH-US) broadly sold off, plunging 5%. Yet, AI chip leader Nvidia (NVDA-US) managed to close in positive territory, sparking speculation about whether the tech sector’s biggest sleeping giant is about to awaken.

Nvidia closed up 0.7% at $196.93 per share. Since the end of last month, its stock has been hovering just below the $200 mark, down 17% from its all-time high in May and with year-to-date gains now pared to just 4%, reflecting investor attention shifting toward other AI-related plays like memory stocks.

However, Nvidia now holds an advantage those stocks lack: a surge in bullish options flows.

According to ThinkorSwim data, over 1.5 million call options were traded on Tuesday, compared to fewer than 690,000 puts. The number of calls actively bought was more than double the number of puts actively bought.

In contrast, the volume ratio for the broader semiconductor ETF was completely reversed—on SMH, puts outnumbered calls nearly four to one, with traders buying 33,000 puts versus only 7,300 calls.

A similar pattern emerged on Monday. Nvidia had refuted a SemiAnalysis report claiming delays in next-generation Kybe server rack shipments. That day, call volume for Nvidia exceeded puts by more than two to one, with about two-thirds of the $600 million in total option premiums tied to calls. The number of traders actively buying calls was nearly triple those buying puts.

One notable cluster of trades, likely initiated by a single trader, involved a $3.5 million bet on July-end expiry calls with a $200 strike price. These contracts cost slightly under $7 per contract at the time, meaning Nvidia’s stock would need to rise about 5.5% by month-end to turn a profit.

Currently, traders appear to be betting that Nvidia’s recent stabilization will evolve into a rebound. At the time of writing, the top five most traded contracts were all calls expiring on Wednesday. According to SpotGamma, the most popular was the $200 strike call, with nearly 170,000 contracts traded and total premiums reaching $11 million.