Nvidia fell into a technical correction area in just one day. Earlier on Tuesday, 0.06 million put spread options contracts were bought at $119/$115, with a total cost of approximately $1.23 million. On Wednesday morning, about 58,000 of the same CFDs were exchanged at once, with a price of approximately $7.83 million. Market participants said the trading seemed to be closing out. If it was the same trader, the total profit would have exceeded $6.5 million.
A trader who accurately shorted in the options market made a profit of more than $6.5 million in one day.$NVIDIA (NVDA.US)$On Tuesday morning, 0.06 million put spread options contracts with a strike price of $119/$115 were bought for a total cost of approximately $1.23 million. This option is equivalent to buying a put option with a strike price of $119 while simultaneously selling a put option with a strike price of $115 and the same expiration date.
The index plunged nearly 7%, tracking the hottest ETF and experiencing the largest decline since the outbreak. Nvidia fell 6.6%, the worst among the 'tech sisters' that fell across the board, and fell nearly 13% at one point and triggered a circuit breaker. Nvidia eventually closed down 6.6%, at around $118, entering a technical adjustment zone.
In other words, the buyer is betting that Nvidia's stock price will drop below $119 by this Friday, while reducing the cost by selling the lower strike price of $115 put option. This reduces the risk compared to simply buying the $119 put option, but also limits the maximum profit potential.
In order for the above trade to be profitable at the expiration of the option this Friday, Nvidia's stock price needs to fall by nearly 6% from Tuesday's closing price. In just one day, Nvidia, the "center of the US stock universe," really fell, and this trade quickly paid off.
On Wednesday, the trading volume of some short-term options contracts surged. Some market participants believed that Keith Gill, known as Roaring Kitty, the leading retail investor, may have sold some of the company's recently disclosed options positions.$PHLX Semiconductor Index (.SOX.US)$The brutal diving nearly 7%, tracking the hottest ETF of the index experienced the largest decline since the epidemic, with Nvidia down 6.6%, the worst among the "Tech Seven Sisters" that fell together.$ASML Holding (ASML.US)$Nvidia fell nearly 13% at one point and triggered a circuit breaker, ending the day down 6.6% to close at around $118, falling into a technical adjustment zone.
It is worth mentioning that on Wednesday morning, about 58,000 identical spread contracts were traded at once for a price of approximately $7.83 million. Although it cannot be confirmed whether this was done by the same investor, market participants said that the transaction appears to have been closed. Therefore, if it was the same trader, the total profit was over $6.5 million.
Editor/Somer