(Bloomberg) -- The expiration of large option positions on Friday could help Nvidia Corp. shares push higher, according to analysts at Spotgamma.
The option specialists note that there is “a giant $2 billion worth of raw gamma at the 120 strike,” of which about half will roll off Friday. “This suggests that OPEX could remove some resistance,” the team around founder Brent Kochuba says. More than $5 trillion worth of contracts tied to US single stocks, ETFs and indexes will expire Friday.
Gamma — a measure of how many additional shares of the underlying stock options dealers will need to buy or sell to remain balanced — can at different times act as a barrier or an accelerant for market moves. The chip maker’s shares have been swinging within a range in September, unable to break above $120 level and underperforming both the Nasdaq 100 and the S&P 500 benchmarks this month.
More broadly, tech stocks haven’t been in favor this month, performing in line with the S&P 500, while investors favored some of the laggards of the year as the Federal Reserve embarks on a rate-cut cycle.
Additionally, options implied volatility looks relatively cheap, especially for calls, with the 1-month skew at a 90-day low. “Calls may be a defined-risk way to play Nvidia coming back to life,” Spotgamma suggests.
--With assistance from Jan-Patrick Barnert.
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