Sometimes when we see huge dips and strong VIX we spot unusual options activity ie extremely bearish — traders hitting the buy button hard are trying to cash in on their further downside. However, today, in general, buyers entered Buy the dip using options — and no “dip-buy” was bigger than that of the Nvidia whale. That’s what Market Rebellion co-founder and unusual options pioneer Jon Najarian visited Fox Business today. As he spoke with “Earning moneyPresenter Charles Payne asked an important question:
Nvidia was largely to blame for today’s red market action. On the final day of a 10-week rally, with a weekly RSI above 89, Nvidia fell more than 4% — its worst day since October 2022. This came amid widespread rumors that an Nvidia stock split was imminent.
However, instead of running for the hills along with many other investors and traders, a trader we call Nvidia whale entered a truly titanic trade:
A market approx worth $1 billion of $820 warning call options expiring in June. This isn’t their first trade either. Back in late February 2023, this buyer bought 31,500 $720 strike calls expiring in May, worth about $300 million at the time. This was a roll of that trade, which was a roll from a previous trade at the $680 strike before that!
Here’s Jon’s take on this trade and the Nvidia whale:
“They have over $1.4 billion worth of options invested – that’s a TON! These guys don’t just buy 5 lots or 10 lots, they buy 30,000 options in one rift – the equivalent of 3 million shares. I think it’s one of the biggest hedge funds on the street. I don’t know who it is, but I’ll tell you what… they were right, right, right. That’s why we like to follow them.” – Jon Najarian
They bought them earlier in the day — and it doesn’t look like the last half of that decline scared them off that trade based on options volume analysis.
But who could the Nvidia whale be?
One possibility is someone like Susquehanna International Group. This is one of the largest options trading companies in the world. As of their last 13-F filing, Susquehanna International held a position in Nvidia call options worth more than $10 billion. That was in December 2023, meaning if they still hold those positions, they are already looking at an astronomical profit. The fund also held a $1.58 billion position in Nvidia stock — the second largest single stock position (the first is Microsoft). That said, Susquehanna also had a large number of put options on Nvidia, which makes the case for Susquehanna somewhat murkier.
Another possibility is someone like Blackrock. In their latest 13-F filing, Blackrock owned a whopping $88 billion worth of Nvidia stock, making them one of the absolute largest investors in the chip giant. This substantial number of shares were owned together with one additional $447 million in Nvidia call options. The dollar amount associated with these options would correspond well with the size of the previous options trades we’ve seen on this name leading up to this roll, as this 13-F filing was also made in December 2023. At that time, Nvidia was Blackrock’s largest single stock outside of ETFs.
But it doesn’t stop there: The possibilities are almost endless. For example, the list below shows five other funds with multi-billion dollar Nvidia call options:
- Jane Street Group
- Citadel Advisors
- IMC-Chicago LLC
- Simplex Trading LLC
- Goldman Sachs
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However, the catch with these five is that, like Susquehanna, they also hold huge positions.
Another possibility is a wealthy individual investor, someone like legendary investor Stanley Druckenmiller, with the Duquesne family office. Last quarter, Druckenmiller took a position in Nvidia call options worth more than $400 million, according to a recent 13-F filing.
So is he an individual investor?
The real answer is we do not know which powerful investor placed this trade. The question of who the Nvidia whale is will likely remain a mystery, and that’s okay. What is important is to know it is there.
Regardless of who bought this massive amount of Nvidia call options, by leveraging the power of unusual options activity, we can take this trade and ride with it. We can even raise it since this trade is a very expensive opening. For example, one could go to the June expiration where these options were purchased, and instead of taking an at-the-money call, they could consider buying an in-the-money put to hedge their risk and reduce the capital needed to make the transaction (in exchange for limiting their potential profit).
What is also important is that this was one options trading. Using options, this investor limit their risk in a high-performing stock while leaving room for potential uncapped gains should this chip giant continue to push higher. They didn’t back down when Nvidia continued to fall, and that may be because they know their risk in this style of stock replacement is significantly lower than if they were looking for the same leverage using stocks, since they would have to buy 3.7 million shares in order to gain the same control over the stock. That’s the power of choices, and that’s what Jon and Pete Najarian named their new book Is not a choice – because it is not an option to trade in stocks only. The use of options allows investors to limit their risk-profit leverage to the upside, as well as make diversified trades on a variety of different price outcomes.
So instead of asking the question, “what is the Nvidia whale?” consider asking yourself,
“Why did they make that trade?’
“What method they chose to make this trade?’
“How can I use the information in this trade to my advantage?”
It’s questions like these that will help you become a better equipped, more skilled trader.
Want more unusual options activity information like this, supplemented with trade ideas created by professional options analysts and former investors? Check out Market Rebellion’s unusual options activity service below.
