NVIDIA’s Latest Rip Is Just A “0DTE Momentum Trade” For Now

NVIDIA's shares closed at $102.83 price level last Friday, hammered by concerns over peaking margins, the AI demand outlook, and macroeconomic worries. Yet, at the time of writing, the high-beta stock is trading 15 percent higher relative to its closing price on Friday. The cause: reassurances on the demand profile for AI-focused products and supercharged by extremely short-dated call options.

As we noted recently, Oracle's latest earnings call has played an important role in brushing aside concerns around the demand outlook for AI products, with the company taking pains to assert that the demand for its data centers is still "outstripping supply." In fact, Oracle is so confident in its stated outlook, particularly in relation to the soaring inference demand, that it is now planning to build as many as 2,000 data centers, constituting a phenomenal increase from its current capacity of 160! Also, one such facility will consume at least a "gigawatt" of power from as many as three small-scale nuclear reactors (SMRs).

But the real rally kickstarter came when NVIDIA's CEO Jensen Huang noted at yesterday's Goldman Sachs Communacopia + Technology conference:

"The demand [for chips] is so great, and everyone wants to be first and everyone wants to be most."

He went on to add:

"We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can."

Huang also asserted that, given the current semiconductor design limitations, the growing demand for accelerated computing remains the company's "least risky market opportunity." This suggests that NVIDIA already has a viable hedge should the AI-focused demand component disappoint in the years ahead.

This brings us to the crux of the matter. Huang's comments were all that were needed for market algos to kick into high gear and unleash a rip-roaring rally. According to Nomura's Charlie McElligott, NVIDIA was responsible for a whopping 44 percent of the gains in the benchmark S&P 500 index yesterday, and ~27 percent of the gains in the Nasdaq 100 index. In fact, McElligott went so far as to claim that the situation was "absolutely hilarious."

Today, SpotGamma has added further color to this momentum overdrive, noting that 6.2 million options contracts on NVIDIA were traded yesterday, constituting the 11th largest activity since the January of 2020.

Critically, all of the top 11 (by volume) NVIDIA options contracts that were traded yesterday expire on the 13th of September in what is essentially a short-dated momentum play.

SpotGamma then notes a cyclical pattern:

"NVDA is ~7% of SPX/NDX and +20% of major tech ETF/indexes like SMH. If you just jam NVDA with short dated calls, is that creating enough reflexive flow to force then entire equity complex higher? ex: NVDA moves up SPX cause its 7% of the index, which creates more NVDA buying because NVDA is 7% of SPX? Then everyone is super bullish on a move that was just a 0DTE NVDA momentum trade?"

Of course, as long as the market is convinced that NVIDIA's bullish case is impregnable, the stock will likely remain susceptible to such momentum-igniting reflexive flows.

About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.

Follow Wccftech on Google to get more of our news coverage in your feeds.