Nvidia options trade nears $200 million gain after sharp share-price drop

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Nvidia options $200M gain

Highlights

A complex Nvidia options trade started on October 12 cost $8.32 million and is now worth about $196 million as shares fell to $166.
The structure profits if Nvidia closes between $11.46 and $150.46 on January 15, with maximum potential profit of $892 million but losses possible if shares drop well below $100.
Macro Risk Advisors notes the trade's net notional delta surged to nearly $1 billion from $90.6 million, with daily theta at negative $880,000, making outcomes highly sensitive to share moves and time decay.

Trade structure and valuation shift

As reported by Financial Times, Macro Risk Advisors identified an Nvidia options position entered on October 12 that combines the purchase of 180,000 January put contracts with a $150 strike and the sale of 280,000 January put contracts with a $100 strike. Joseph Niles of Macro Risk Advisors says the structure cost about $8.32 million to establish, with Nvidia shares trading at $226 at the time.

The position was heavily out of the money when it was initiated, meaning the probability of Nvidia falling to those levels by the January expiry appeared low. That kept the purchased $150 puts relatively cheap, while the sale of the lower-strike $100 puts helped offset part of the premium paid.

With Nvidia shares now around $166, the value of the $150 puts has risen sharply as the likelihood of finishing in the money increases. Macro Risk Advisors calculates that the trade is now worth about $196 million, or roughly 24 times the initial premium paid.

Risk profile and broader market implications

The position still carries significant complexity because the trader benefits as Nvidia moves toward $150, but faces growing risk if the stock falls well below $100 because of the short put exposure at that strike. Macro Risk Advisors says the maximum potential profit is about $892 million, while the trade can lose money if Nvidia declines significantly beneath the lower strike.

According to Niles's calculations, the structure remains profitable at expiry as long as Nvidia trades between $11.46 and $150.46 on Jan. 15. The report also says the trade's net notional delta has expanded to nearly $1 billion from just over $90.6 million at entry, while theta stands at negative $880,000 a day, underscoring how fast time decay can erode option value as expiration approaches.

Pre-market trading indicates Nvidia is set to open slightly higher at about $168, but the position remains highly sensitive to further swings in the stock. The trade highlights how concentrated options bets can rapidly reshape gains and risks around one of the market's most closely watched semiconductor companies.

Previously, we examined Nvidia CEO resignation and the governance concerns that unsettled investors and pressured NVDA shares.

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