benzingahace 19d
Nvidia Corp (NASDAQ:NVDA) may be one of the hot hands on Friday but that doesn't quite erase concerns hanging over the semiconductor juggernaut. True, the company is practically synonymous with artificial intelligence, with its graphics processors powering the underlying advanced protocols. Nevertheless, from an average share price perspective, NVDA stock hasn't made much ground since last August, raising viability concerns.Fundamentally, Nvidia faces several challenges. Overall, fears of an AI bubble have contributed to share price erosion despite compelling arguments to the contrary. One could also make the argument that valuations are stretched relative to prior periods. Moreover, the latest geopolitical rumblings — such as the Greenland takeover proposal — along with broader questions about economic stability have contributed to risk-off jitters.Not surprisingly, the dark clouds have had a clear impact on NVDA stock options pricing. Looking at volatility skew — a screener that identifies implied volatility (IV) or the target stock's kinetic expectations across different strike prices for the same options chain — shows put options being bid across the price spectrum for the Feb. 20 expiration date. What's significant is that the put IV readings stand above the calls for most of the prices.Effectively, traders are prioritizing downside protection, which does suggest that there is fear impacting NVDA stock. However, that's not necessarily a bad thing for the bulls. Keep in mind that the smart money is still participating in NVDA — they're just doing it in a hedged manner. Elevated call activity above the current spot price (though below the puts) indicates that there is controlled optimism.More importantly, because downside protection is the dominant theme right now, call options are relatively cheap. So, if you ...Full story available on Benzinga.com