Traders bet Nvidia's stock will return to record highs soon

Shares of Nvidia fell a bit on Tuesday after a WSJ report raised questions about OpenAI growth targets and the whole AI complex.

Options traders used the sell-off as an opportunity to make bullish bets that the chipmaker will return to all-time highs.

Up until Tuesday, Nvidia options had been cheaper to trade than in the VanEck Semiconductor ETF (SMH), a result of its tight trading range for much of the past year. That changed today as implied volatility rose alongside the price and traders piled into the stock with a mostly bullish bias.

Traders now expect upwards of an 10% move in Nvidia by the end of next month, according to the price of the at-the-money straddle expiring May 29, a week after the company reports earnings. Call volume was more than double that of puts on Tuesday and premiums heavily skewed towards calls, with $648 million of a total $818 million spent on calls, according to data from SpotGamma.

Nvidia, 1 month

Still, traders are taking a more measured approach in NVDA compared to some of its peers. The biggest trades in Nvidia were mostly spreads that involved a combination of buying and selling calls. Specifically, there was a buyer of a 200/260 call spread that expires next March.

It's a bet that NVDA shares will be at $260 by March of 2027, or 21% higher from here.