Options Income Strategy | SMCI surges nearly 10% in a single day, partnering with Cisco to expand the "NVIDIA AI Factory"; how to trade high volatility?

1. SMCI: Dual catalysts from Cisco partnership and NVIDIA earnings drive a nearly 10% surge on heavy volume

$Super Micro Computer (SMCI.US)$ Closed up 9.35% on Tuesday at $38.46, with a turnover rate of 8.538% and an amplitude of 7.364%. In the previous trading session (Monday), SMCI had plunged 5.56% to $35.17. On Tuesday, a high-volume bullish candle fully recovered Monday's losses and hit a recent new high, indicating intense bargaining between bulls and bears.

Technical Analysis:

Looking at recent trends, SMCI began rebounding after hitting a low of $23.38 in mid-July. On July 22, it surged 19.84% in a single day, breaking through the $30 level, and subsequently consolidated in the $28–$32 range. On August 4 and August 12, it saw another single-day surge, then oscillated in the $36–$40 range. This Tuesday, it strongly rebounded to $38.46, showing a robust short-term pattern of "rapid recovery after a sharp drop."

News Analysis:

The core catalyst stems from resonance in two areas.

First, $Cisco (CSCO.US)$Announced partnership with Super Micro Computer on Tuesday, expanding its "Secure AI Factory" solution based on $NVIDIA (NVDA.US)$ by adding high-density liquid-cooled and air-cooled computing systems. The new solution will support NVIDIA's next-generation platform, with shipments to customers expected to begin in October 2026. This collaboration directly validates SMCI's core supplier status in AI computing infrastructure, meaning its product line has been integrated into Cisco's full-stack AI solutions for enterprise clients.

Secondly, $NVIDIA (NVDA.US)$is scheduled to release its earnings report after the market close on August 26 (Wednesday). The market is trading ahead on expectations of prosperity in the AI computing supply chain, driving strength in the semiconductor sector.The options market also showed clear bullish signals—on August 25, SMCI option volume totaled approximately 274,500 contracts (214,000 calls and 60,500 puts). Call volume was 3.5 times that of puts, indicating strong directional bullish sentiment.

Key variables to watch include NVIDIA's earnings report and guidance after the close on August 26, the actual order conversion following the delivery of the Cisco collaboration solutions, and the commercialization progress of liquid cooling solutions.

Major Bank Views:

Among 11 analysts, 18.18% rate it a Buy, 81.82% rate it a Hold, and none rate it a Sell. The average target price is $42.50, with a high of $51.00 and a low of $35.00.

2. Short Option Strategies

IV Analysis

Currently, $Super Micro Computer (SMCI.US)$ Implied Volatility (IV) stands at 75.44%, with an IV percentile of 32.14%. Although the absolute IV level is not low, it is at a relatively low-to-moderate position compared to its own history, indicating that the market has priced in some near-term volatility but it has not reached extreme levels. In the current environment, short strategies can capture reasonable time decay profits, though investors should remain mindful of potential short-term IV spikes triggered by NVIDIA's earnings report.

Cash-Secured Put

Sell 1 contract of $Super Micro Computer (SMCI.US)$Sell the Sep 18, 2026 $32.5 Put, and reserve sufficient cash to cover potential assignment.

Opportunity Rationale:

SMCI is driven by the dual catalysts of its expanded AI factory solutions partnership with Cisco and NVIDIA's upcoming earnings. While there is a strong short-term rebound, the risk of chasing highs is significant. If investors are bullish on the medium-to-long-term logic for AI hardware but are unwilling to chase prices above $38, selling out-of-the-money (OTM) Puts allows them to collect premiums; if the stock pulls back, they can establish positions at more favorable prices as planned.

Covered Call

Hold 100 shares $Super Micro Computer (SMCI.US)$Simultaneously, sell 1 contract of SMCI Sep 25, 2026 $47 Call.

Investment Thesis:

For investors already holding SMCI shares, the current price is approaching previous resistance levels, and uncertainty surrounding NVIDIA's earnings results may lead to a short-term pullback after a rally or high-level consolidation. Selling out-of-the-money (OTM) Calls allows investors to collect premiums to lower their cost basis; if the stock continues to consolidate, the premiums can hedge against drawdowns; if the stock rises above $47 and gets assigned, it effectively locks in阶段性 gains near the target price.

3. Risk Control Notes

Although short-option strategies generally have a high probability of profit, investors must still implement sound risk management:

- Position management is core. The greatest risk for option sellers lies in black swan events. It is recommended that margin usage for a single underlying asset does not exceed 20% of total capital. Do not sell options beyond your capacity to absorb losses just to chase premiums.

- Pay attention to rolling positions for Covered Calls. When a Covered Call becomes deep in-the-money, if you remain bullish on the underlying stock, consider buying back the current option to close the position and simultaneously selling an option with a further expiration date and a higher strike price. This helps avoid having the underlying shares forcibly sold at a lower price.

- Be wary of left-tail risks when selling Cash-Secured Puts. If the stock price drops significantly due to deteriorating fundamentals, do not mechanically hold on; instead, cut losses or roll down positions based on your risk tolerance.

Make good use of the Options Seller Hub to understand income strategies for selling options and earnOption premiums！

Options Risk Disclosure

An option is a contract that gives the holder the right—but not the obligation—to buy or sell an underlying asset at a predetermined price on or before a specified date. Option prices are influenced by multiple factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility. Implied volatility reflects the market's expectation of future volatility over the life of the option and is derived by back-solving from the Black-Scholes option pricing model. It is commonly viewed as an indicator of market sentiment. When investors anticipate higher volatility, they may be willing to pay more for options to hedge their risk, leading to higher implied volatility. Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricings, and manage risk exposure.

Disclaimer

This content does not constitute an offer, solicitation, recommendation, advice, opinion, or any guarantee regarding any securities, financial products, or instruments. The risk of loss in trading options can be substantial. In certain circumstances, your losses may exceed the initial margin deposit. Even if you place contingent orders, such as 'stop-loss' or 'limit' orders, there is no guarantee they will prevent losses. Market conditions may render such orders unexecutable. You may be required to deposit additional margin on short notice. If you fail to meet the required margin within the specified timeframe, your open positions may be liquidated. Nevertheless, you remain fully responsible for any resulting deficit in your account. Therefore, prior to trading options, you should thoroughly study and understand options and carefully consider whether such trading aligns with your financial situation and investment objectives. If you trade options, you should become familiar with the procedures for exercising options and handling expiration, as well as your rights and obligations upon exercise or expiration. Options trading involves substantial risk and is not suitable for all investors. Investors should carefully read 'Characteristics and Risks of Standardized Options' before engaging in any options trading strategy.

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