On Friday, investors continued to increase their bearish positions in the semiconductor sector. A series of notable transactions involving Micron and NVIDIA dominated the market, which also raised doubts about this trend in chip stocks.
According to the data from ThinkOrSwim and SpotGamma, as of noon, the trading volume of put options for SMH has exceeded 180,000 contracts, while the trading volume of call options was only 50,000 contracts; the premium related to put options amounted to 46 million US dollars, and that for call options was 26 million US dollars. SpotGamma states that, based on trading volume, the 129,000 put contracts appear to represent buying positions.
Barchart Data shows that the ratio of outstanding put options to outstanding call options has risen to 1.95, the highest level since the second week of August. The same ratio also continued its recent upward trend, rising to 1.51. Invesco QQQ Trust
There are also a few large orders for individual stocks on the market that are particularly noticeable.
On the NVIDIA side, not long after the market opened, someone purchased 100,000 put options with an exercise price of $180 and expiring on January 15, 2027, for a transaction amount of $21 million, which was the largest trade in that stock's options market on that day. If this was a speculative position, then it would require NVIDIA's stock price to fall by 22% before expiration.
And perhaps the most noteworthy transaction will occur with Micron.
Although the trading volume of call options was 40% higher than the average level, according to the data from SpotGamma, approximately $270 million in premium was related to potential put option purchases. Part of this difference can be explained by a series of trades involving deep-in-the-money put options that expired in June 2028.
Most of these transactions – approximately 125 put options with strike prices between $2,250 and $2,500 – were executed at prices closer to the selling price, indicating that these contracts were bought. By the same logic, the 50 transactions with a strike price of $2,050 may have been sales. The current stock price of Micron is around $1,030.
If understood at face value, this would be a short spread position with a net value of $14.5 million, and the option delta is close to -1. This means that the effect of this trade is similar to that of a synthetic short position. Traders sometimes choose to buy deeply in-the-money put options instead of directly shorting stocks, possibly because the cost of borrowing stocks is too high, or because they wish to limit their risk within a defined range. When buying options, the maximum loss is the initial amount invested.
Of course, when analyzing large transactions with low open positions and trading volumes that are far from the current price, it can become ambiguous to determine the direction based solely on the bid-ask spread.
The owner and founder of the Options Market Structure Analysis Platform Volland, Jason DeLorenzo, stated: "Classifying spread combinations using mid-price analysis can also be difficult, as market makers may be willing to concede on one leg of the spread while obtaining a better premium on the other leg."
