How exaggerated is the game of "NVIDIA's End Date Options"?

I haven't tracked the US stock market for more than 4 years, so it's hard to have a clear understanding of this. But I have been tracking Nvidia for 5 years, and it was only in late June of this year that I first experienced the extreme volatility of its options. It used to be quite normal!

Let's start with recent events. Many American friends can't understand how it could open high and end up like last night. They may not use the phrase "unbelievable," but if they knew, that's definitely how they would feel. The after-hours and opening trends of Google, Amazon, and Meta were the normal behavior expected in the US stock market!

Let the data speak

Let me show you how significant the so-called doomsday options with an expiration date of August 25th are. What impact can they have on the stock price?

More than 65% are call options! This indicates that there are more bullish options than bearish ones! If the stock price rises to a certain level, all these options will become in-the-money options, causing significant losses for investment banks!

Lastly, let's look at the price distribution and range of options. This may provide some reference!

From the chart, we can see that the exercise prices of the bullish options for Nvidia are mainly concentrated between $500 and $510! Among them, $500 has the highest trading volume! So last night, Nvidia faced significant resistance above $500!

Today, a domestic analyst asked, "If it rises to $510 and all these options are in-the-money, what kind of investment bank can afford to lose so much money?" That's a good question!! Indeed, they can't afford it! So when it reaches $500, the pressure is very high!

So, what is the best price for investment banks? The answer is obvious! Between $470 and $480! This way, they can eliminate the majority of long and short options and earn the largest ever revenue from derivative products!

I have never carefully analyzed this options data before, but since the end of June, I have clearly felt that there have been anomalies occurring at certain key levels and important exercise periods. For example, at the end of June, a certain media outlet reported negative news about Nvidia's sales ban, and the stock price subsequently dropped!

I checked the exercise prices of options from June 26th to June 30th! A large number of them were concentrated around $420! It's crazy! As expected, from June 26th to June 30th, the stock price remained between $407 and $423! Both long and short positions were wiped out!

A large number of options will expire this Friday, and it ended today!

There is a high probability that Nvidia's stock price will return to normal next Monday and beyond!