"The Big Short" declares war on AI—are semiconductor equipment stocks overheated?
Nvidia Pullback Draws $66 Million Bullish Bet Ahead of CPI | Smart Money Option
On Tuesday, the AI infrastructure sector came under renewed pressure as investors continued to digest the implications of a stronger-than-expected U.S. jobs report. The $Nasdaq Composite Index (.IXIC.US)$ fell more than 2% intraday, while the $PHLX Semiconductor Index (.SOX.US)$ at one point plunged over 8%.
AI-related stocks were broadly lower. As of publication, $Micron Technology (MU.US)$ was down more than 6%, $Marvell Technology (MRVL.US)$ had fallen over 11%, $Qualcomm (QCOM.US)$ was down more than 8%, $Advanced Micro Devices (AMD.US)$ had lost more than 6%, and $Intel (INTC.US)$ was down over 5%. At the same time, investors were awaiting the release of the U.S. May CPI report, with concerns that persistent inflation could further delay Federal Reserve rate cuts and continue to pressure high-valuation technology stocks.
However, even as semiconductor stocks faced heavy selling, Nvidia's options market saw a notable institutional bullish bet emerge.
According to options flow data, a trader executed two large purchases of Nvidia October 16, 2026 $220 call options. One transaction involved 10,000 contracts, while the second added another 34,990 contracts, both executed at prices near $14.80 per contract.
In total, the trader purchased 44,990 call contracts, representing approximately $66.65 million in premium.
Notably, open interest in the contract stood at just 6,980 contracts before the trades occurred, while volume approached 45,000 contracts. This suggests the activity was likely driven by the establishment of a new institutional position rather than the closing or transfer of existing positions.
Based on the premium paid, the position carries a breakeven price of approximately $234.80, implying the trader is betting Nvidia can gain more than 15% over the coming months.
The October expiration date is also noteworthy. The position captures Nvidia's upcoming quarterly earnings cycle, continued Blackwell deployment, accelerating AI server demand, and ongoing capital spending by hyperscale cloud providers. In other words, the trader appears to be positioning not for a short-term bounce, but for the continued expansion of the AI infrastructure investment cycle.
Perhaps even more interesting is the timing. The trade was established just ahead of the May CPI report, one of the market's most closely watched macroeconomic events. While investors remain focused on inflation and interest-rate risks, this trader committed more than $66 million to a bullish Nvidia position before the data was released, signaling confidence in the company's medium-term outlook.
Importantly, this is not the first major bullish Nvidia options trade seen recently. During last week's semiconductor selloff, traders opened more than 31,000 contracts in a bullish call spread targeting further upside in Nvidia. Similar large bullish positions have also appeared recently in Microsoft, Alphabet, and Taiwan Semiconductor options.
For investors, the key takeaway may not be the strike price itself, but the timing of the trade. While the semiconductor sector was experiencing one of its sharpest declines in months and the market remained concerned about inflation and higher-for-longer interest rates, institutional capital continued to accumulate upside exposure.
If AI demand growth, hyperscaler capital expenditures, and Blackwell-related deployment trends remain intact, the recent pullback may prove to be less about deteriorating fundamentals and more about a reset in positioning. With large bullish options bets continuing to emerge, Nvidia's next move could become an important gauge of whether the AI trade is ready to regain momentum.
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Disclaimer: Options trading entails significant risk and is not appropriate for all customers. It is important that investors read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Opening new options positions close to or on their expiration date comes with substantial risk of losses for reasons that include potential volatility of the underlying security and limited time to expiration. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period. Certain complex option strategies carry additional risk, including potential losses that may exceed the original investment amount. If applicable, supporting documentation for any claims will be furnished upon request.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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