In today’s video… understanding the NVDA earnings trade.
Yesterday was a big day in the markets, with everyone laser-focused on Nvidia’s earnings report after the bell. The stock had been rising ahead of the announcement, but what really caught my attention was the options market.
Traders were piling into call options—hundreds of thousands of contracts were being sold. But here’s the thing: someone has to take the other side of those trades.
Enter the Casino
In this case, that “someone” was the house — specifically, big players like hedge funds and Citadel. They were more than happy to underwrite those calls.
For example, May 30 Nvidia call options at the $150 strike were selling for $3–$4 each, even though the stock was trading around $130. That’s a 20% move required in just two days for those calls to be profitable.
Yesterday afternoon, I flagged that setup in my Telegram channel and said it was a no-brainer: if you owned the stock, it was basically free premium you could have collected.
Even if you didn’t own shares, you could write the call “naked” and collect juicy premium for a move that was extremely unlikely.
Why the Move Was Capped
So why wasn’t a 20% move on the table? Because the house had a lot to lose. Citadel and others had collected all that premium and had a massive incentive to keep NVDA pinned under that $150 strike. That’s where the game gets interesting.
At the open this morning, Nvidia popped about 6–7%—but never went higher.
Why? Because the casino stepped in.
They sold stock to keep prices in check and protect all the call premium they had collected.
The Magnet Effect
This kind of “pinning” isn’t unusual on stocks like Nvidia, especially around big news events.
And once you understand how it works, it opens the door to strategies that most traders never even consider — like selling calls into earnings even if you don’t own the stock.
By the close today, those $150 calls were trading for just 6 cents. They’ll expire worthless tomorrow.
Know the Game, Play It Better
So keep an eye on these situations. When option premiums get out of hand and the casino steps in, there’s often an opportunity hiding in plain sight.
I’ll flag more setups like this in my Telegram channel (join here for free) next time they pop up. But for now, NVIDIA was the trade of the week — and it played out just like we expected.
Talk soon,
JD
The Rational Trader
P.S. If you’ve got 20 minutes to trade in the morning, Geof Smith wants to show you how to target $500 at every opening bell.
