Key focus.

After reaching a new high at the opening, the Nasdaq and S&P 500 indexes showed a pullback. At the same time, the semiconductor sector, which has received much attention, showed a division, with Nvidia diving at a high level and AMD rising nearly 5% against the trend.

Analysis shows that Thursday's market fluctuations may also be related to the 'triple witching hour' on Friday. According to statistics, there are about $5 trillion worth of US stock indexes, stocks, and ETF options expiring this Friday. After the market closes on Friday, it is also the day when the S&P Dow Jones indexes adjust their weights every quarter, and a bunch of ETFs that track the index will also adjust their positions accordingly.

1,$NVIDIA (NVDA.US)$The stock price fell more than 3% overnight, and the intraday volatility reached 8%. The total trading volume of options surged nearly twice compared with the previous trading day. Among them, the put-call ratio expanded from 0.58 to 0.7, indicating a significant increase in demand for put options. In the options chain, the two highest trading volumes were the call options with a strike price of $140 and the put options with a strike price of $130, both expiring today, with a trading volume of 550,000 and 430,000 respectively. The open interest was 140,000 and 60,000 respectively.

According to the options platform SpotGamma's estimate, the so-called 'triple witching hour' will see options worth about $5.5 trillion linked to indexes, stocks, and exchange-traded funds (ETFs) expire, making it the largest event of its kind in history. Since investors and traders need to adjust their positions before these contracts expire, the market tends to experience significant volatility and an increase in trading volume before and after the 'triple witching hour'.

The value of the contracts related to Nvidia that are about to expire ranks second among all underlying assets, second only to the S&P 500 index. On the eve of the 'triple witching hour,' the trading volume of Nvidia put options has shown an upward trend, with the put options with a strike price of $135 and $130 having the largest increase in trading volume.

2,$Advanced Micro Devices (AMD.US)$It rose nearly 5% overnight, with the highest intraday increase approaching 8%. The total trading volume of options nearly doubled, and the call-to-put ratio was 62.4%. Both long and short positions are relatively tense in the options chain, with the call options expiring today with a strike price of $165 being the most active in trading. The option rose nearly 260% yesterday. There are also multiple put options betting that AMD will drop to $160 today.

At the Taipei Computer Show, AMD announced the new generation of desktop processors, the Ryzen 9000 series with Zen5 architecture, and the Ryzen AI 300 series notebook processor. According to the latest information from the US-based retailer B&H, the Ryzen 9000 series will be available for pre-sale on July 31 and may also be available on that day. At the same time, BestBuy listed a new Ryzen notebook from Asus, which will be released on July 15, half a month earlier than the desktop version.

3,$Micron Technology (MU.US)$It fell more than 6% overnight, with implied volatility rising to 72%, staying at the highest level of the year for five consecutive days; the call-to-put ratio remains high, nearly 70% in recent days. Multiple options with a strike price between $150 and $160 that expire today have been snapped up.

1. US stock options trading list

2. ETF options trading list.

3. Individual stock implied volatility (IV) ranking.

Risk warning

Options are contracts that give the holder the right to buy or sell an asset at a fixed price on or before a specific date, without any obligation. The price of an option is influenced by various factors, including the current price of the underlying asset, exercise price, expiration time and implied volatility.

Implied volatility reflects the market's expectation for the future volatility of an option, and it is a signal of market sentiment derived from the option pricing model called Black-Scholes (BS). When investors expect greater volatility, they may be willing to pay a higher premium for an option to help hedge risks, thus resulting in a higher implied volatility.

Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricing, and manage risk exposure.

Disclaimer

This content does not constitute an offer, solicitation, recommendation, opinion, or guarantee of any securities, financial products or instruments. The loss risk of buying and selling options could be substantial. In certain circumstances, you may suffer losses exceeding the amount initially deposited as margin. Even if you set up backup instructions, such as stop loss or limit instructions, losses may not be avoided. Market conditions may render such orders impossible to execute. You may be required to deposit additional margin in a very short period of time. If the required amount cannot be provided within the specified time, your open contracts may be closed. However, you are still responsible for any shortfalls in your account arising from this. Therefore, before buying or selling, you should research and understand the options, and consider carefully whether such trading is suitable for you based on your financial situation and investment objectives. If you buy or sell options, you should be familiar with the exercise of options and the procedures at expiration, as well as your rights and obligations when exercising an option or at expiration.

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