Institutional investors, with their sophisticated tools and technology, often manage to capitalize on a sustained stock rally, leaving retail investors puzzled as to how much steam is left in a rallying stock. One such stock is NVIDIA Corporation’s NVDA. Shares of the leading chip-maker closed 24.37% higher on Thursday after reporting quarterly earnings and an upbeat forecast that beat Wall Street estimates. The resulting enthusiasm pushed up AI-related stocks, pushing the Nasdaq Composite and the S&P 500 up from a debt ceiling-induced decline.
Also Read: How To Buy NVIDIA (NVDA) Stock
To understand the immediate prospects for Nvidia stock, consider the options market’s pricing and what it’s indicating:
1. Resistance: Nvidia shares closed at $379.80 on Thursday. Options expiring on June 16 show decent open interest build-up at the $400 Call strike, suggesting the level may provide some resistance in the near term. The stock has rallied over 40% in just one month according to Benzinga Pro.
2. Support: Support level indicators are ambiguous. Options expiring on June 16 suggest relatively higher open interest accumulation at Put strikes between $275 and $300 — levels over 20% below the stock’s current closing price. Although the numbers aren’t significant enough to determine possible support, the pattern could represent a lack of trader conviction and uncertain as to how much short-term correction could occur after the massive rally in such a short time. Open interest numbers will be more telling about support and resistance levels when they improve.
Note that major news breaks or macro events could cause significant movements in stock price and shifts in open interest numbers.
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