Chip Sector Plunges as Traders Bet on Nvidia Rebound
Taylor Wilson
The semiconductor ETF (SMH) dropped roughly 5% on Tuesday, yet Nvidia finished green — options data shows call volume ran more than 2-to-1 over puts, with traders putting real money behind a near-term rebound.
The sector tanked — why did Nvidia buck the trend?
SMH, the benchmark semiconductor ETF, fell about 5% on Tuesday. Nvidia's stock closed higher, materially outperforming the group.
This means → capital was not dumping chip stocks indiscriminately. It was singling Nvidia out as a separate story from the rest of the sector.
In plain terms = every other shop on the street had its shutters down; Nvidia's still had a queue at the door.
How lopsided is the options flow?
Nvidia saw over 1.5 million call contracts trade on Tuesday, versus fewer than 690,000 puts. The call-buy-to-put-buy ratio topped 2:1.
SMH's flow ran in the opposite direction: put volume was roughly four times call volume — about 33,000 put buys against just 7,300 call buys.
This means → traders are making diametrically opposite bets on Nvidia versus the broader chip sector — bullish on the single name, bearish on the group.
Is this bullish sentiment a one-day blip?
No. On Monday, Nvidia call volume already ran about twice put volume. Roughly two-thirds of $600 million in options premium flowed into calls.
The call-buy-to-put-buy ratio hit nearly 3:1 — even more aggressive than Tuesday's reading.
This reflects two consecutive sessions of sustained call accumulation, not a one-off impulse.
What is the $3.5 million single-trader bet banking on?
A suspected single trader bought a combined $3.5 million in Nvidia calls at a $200 strike, expiring late July, at roughly $7 per contract in premium.
In plain terms = to break even, Nvidia's stock needs to climb another ~5.5% and clear $200 by month-end.
The day's highest-volume contract was the $200-strike call expiring Wednesday — nearly 170,000 contracts traded, totaling about $11 million in premium.
Where is the risk in these bets?
Nvidia trades near $200, down about 17% from its May all-time high and up only ~4% year-to-date.
The bullish wave arrived one day after Nvidia publicly denied a SemiAnalysis report claiming its next-generation Kyber server rack was at least a year behind on mass production.
This means → whether Nvidia can convert two days of stabilization into a sustained rebound is the make-or-break test for these call bets — if the bearish thesis proves out, buyers face a total loss of premium.
Content is for reference only, not financial advice.