Chip sector options activity signals rising bearish bets on Nvidia, Micron

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Bearish bets on Nvidia, Micron

Highlights

Put-to-call open interest ratio for VanEck Semiconductor ETF, SMH, rises to 1.95—highest since August—with 180,000 puts and $46 million in put premium traded midday.
Nvidia sees single-day put buy of 100,000 contracts at 180 strike expiring Jan. 15, totaling about $21 million in premium—requiring a 22% price drop to be profitable.
Micron options trades include roughly $270 million premium tied to put-buying, with net $14.5 million synthetic short exposure resembling direct shorting amid high borrowing costs.

Large options trades sharpen focus on chip sentiment

As reported by CNBC, traders step up downside bets across semiconductor names, with more than 180,000 put contracts in the VanEck Semiconductor ETF, SMH, trading by midday against about 50,000 calls. ThinkOrSwim and SpotGamma data show $46 million in premium tied to puts versus $26 million in calls, while SpotGamma says about 129,000 put contracts by volume appear to have been bought.

Barchart data show the ratio of open interest in put contracts to calls for SMH climbs to 1.95, the highest level since the second week of August. The same ratio for the Invesco QQQ Trust also continues its recent rise, reaching 1.51.

In Nvidia, one trade shortly after the open stands out as the largest options trade in the stock on the day, with a buyer taking 100,000 puts at the 180 strike expiring Jan. 15 for about $21 million. If the position is speculative, Nvidia would need to fall 22% by expiry for the trade to pay off at that level.

Micron also sees notable activity, even as call volume runs about 40% above average. SpotGamma data indicate roughly $270 million in premium is tied to likely put-buying, partly driven by a string of deep in-the-money put trades expiring in June 2028.

Micron structure points to synthetic short exposure

The bulk of the Micron trades, about 125 puts with strikes from 2,250 to 2,500, is transacted closer to the ask, suggesting buyers are initiating the positions. By the same reading, 50 trades at the 2,050 strike are likely sold, with Micron shares trading around 1,030.

Taken at face value, the structure amounts to a net $14.5 million bearish spread with an options delta near minus 1, meaning it behaves much like a synthetic short position. Traders may use deep in-the-money puts instead of shorting stock directly when borrowing costs are high or when they want defined risk, because the maximum loss is limited to the premium paid.

Still, reading intent from bid-ask data can be difficult, especially in less liquid contracts with low open interest and volume. Jason DeLorenzo, owner and founder of options market-structure analytics platform Volland, says spread trades can be hard to classify through midpoint analysis because dealers may accept weaker pricing on one leg while securing better premium on the other.

In our earlier article on shifting correlations around AI-linked stocks and portfolio hedging, we noted that investors increasingly saw stretched AI valuations as a reason to reduce concentrated exposure without exiting equities outright. We explained that weakening correlations were opening up more diversification and hedging routes, including put options and inverse instruments, as market participants positioned for an AI-led pullback and rate-driven valuation pressure.

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