Semiconductor ETF options show caution ahead of Nvidia results
Nvidia
reports results on Wednesday, with defensive options contracts on a major semiconductor ETF drawing heavy trading.
For VanEck Semiconductor ETF, the largest semiconductors ETF with some $22 billion in assets, about 2.4 put options changed hands daily over the last 10 days against every call option traded, the most defensive the trading has been in about 10 months, according to Trade Alert data.
Call options convey the right to buy shares at a fixed price in the future while put contracts offer the right to sell the shares at a given price.
Play Video
Pause
Skip Backward
Skip Forward
Unmute
Current Time
0:00
/
Duration
0:00
Loaded
:
0%
0:00
Stream Type
LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
1x
Playback Rate
Chapters
Chapters
Descriptions
descriptions off
, selected
Captions
captions settings
, opens captions settings dialog
captions off
, selected
Audio Track
default
, selected
Picture-in-Picture
Fullscreen
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text
Color
White
Black
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Text Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Transparent
Caption Area Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Transparent
Semi-Transparent
Opaque
Font Size
50%
75%
100%
125%
150%
175%
200%
300%
400%
Text Edge Style
None
Raised
Depressed
Uniform
Drop shadow
Font Family
Proportional Sans-Serif
Monospace Sans-Serif
Proportional Serif
Monospace Serif
Casual
Script
Small Caps
Reset
restore all settings to the default values
Done
Close Modal Dialog
End of dialog window.
"The put buying in SMH ahead of Nvidia's earnings reflects growing concern about potential volatility for the entire sector following the report," said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.
On Tuesday, some 105,000 put options changed hands against about 16,000 call options, by 3 p.m. ET (1900 GMT), Trade Alert data showed.
Live Events
In one notable trade, one investor last week bought 50,000 put options in SMH that would guard against the ETF's shares slipping about 10%, to below $220, by the end of May.
Discover the stories of your interest
Blockchain
5 Stories
Cyber-safety
7 Stories
Fintech
9 Stories
E-comm
9 Stories
ML
8 Stories
Edtech
6 Stories
Nvidia accounts for about a fifth of the semi ETF's assets but due to its dominance in the artificial intelligence market, the chipmaker's influence goes beyond its weight in the fund, analysts said.
While investors have been focused on defensive plays in the SMH ETF, options action on Nvidia itself was more mixed, Murphy said.
Murphy said investors were selling options to take advantage of heightened volatility expectations around the chipmaker's earnings, meaning they were betting the reaction to the chipmaker's results will not be overly severe.
"It's been hedging in SMH while in NVDA they're tactically monetizing elevated premiums ahead of earnings," he said. Susquehanna makes markets in the securities of Nvidia.
Interactive Brokers' list of the 25 most active securities by client orders showed Nvidia ranked second, underlining the heightened investor interest in the results. Still, the stock was only one of two names for which investors were net sellers.
"That likely reflects some caution ahead of earnings after a solid run," Steve Sosnick, Interactive Brokers' chief strategist, said in a note. Nvidia will be the last of the "Magnificent Seven" megacap tech and growth companies to report results for this period. Their stocks have been mixed in 2025 after leading the market higher as a group in the last two years.
For the year, Nvidia shares are up about 0.7%, while SMH shares are up about 1.2%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
3 hours ago
- Mint
US tech-stock stumble shows vulnerability in AI trade
Tech stocks pull back sharply to start week, while other groups gain Investors wary amid seasonally tough period for stocks Powell's Jackson Hole speech could impact market expectations on interest rates NEW YORK, Aug 20 (Reuters) - U.S. technology shares are showing signs of vulnerability after a massive run, which has some investors pointing to overdone AI-driven gains while funds have taken steps to position away from the high-flying sector. Investors are looking to de-risk portfolios or lock in profits during a seasonally difficult period for stocks. Friday's looming speech by Federal Reserve Chair Jerome Powell at the annual Jackson Hole symposium is creating caution, investors said, with the potential for volatility if his comments fail to meet growing market expectations that the central bank is poised to cut interest rates. "When you have overcrowding and you have had such strong performance, it doesn't take much to see an unwind of that," said Keith Lerner, co-chief investment officer at Truist Advisory Services. "At the same time this week, everyone is waiting for the Fed, and there is repositioning ahead of that." The heavyweight S&P 500 tech sector fell sharply for a second consecutive session on Wednesday, putting its decline on the week at about 2.5%, while the tech-heavy Nasdaq Composite was off about 2% for the week. Shares of some highflyers, including Nvidia Corp and Palantir Technologies, were getting hit particularly hard. The pullback comes after a huge rally in which the tech sector soared over 50% through last week since the market's low for the year in April. That easily topped the 29% gain of the broader S&P 500 during that period and drove up valuations of tech stocks to lofty levels. Investors cited wariness about the artificial intelligence trade, which has been a key driver of tech stocks and the broader market as indexes have soared to record highs this year. Shares of Nvidia, the semiconductor giant that has symbolized the AI trade, have gained about 30% this year while shares of AI-focused data and analytics firm Palantir have roughly doubled year-to-date. Indeed, the tech sector's price-to-earnings ratio recently reached about 30 times expected earnings for the next 12 months, its highest level in a year, according to LSEG Datastream, while tech's share of the overall S&P 500's market value is nearly its highest since 2000. Recent cautionary signs included a study from researchers at the Massachusetts Institute of Technology that found that 95% of organizations are getting no return on AI investments, as well as comments by OpenAI CEO Sam Altman, who told tech news website the Verge last week that investors may be getting overexcited about AI. Since last week, some AI-linked shares have pulled back sharply: Nvidia has dropped about 5% while shares of Palantir have slumped some 16%. In Europe, stocks of so-called AI adopters have been under pressure over concerns over how powerful new AI models could disrupt the software sector. Still, some investors said, the caution is unlikely to be a sign that enthusiasm over AI is fizzling. 'These are price corrections," said Andrew Almeida, director of investments at financial planning network XYPN. "But if you look at the big picture, it's clear that more people will be investing more dollars in AI infrastructure. This is certainly not a 'reckoning' with the AI theme." JACKSON HOLE SEEN AS CRITICAL Investors also could be paring back their stock exposure during a traditionally rocky period for equities. August and September rank as the worst-performing months on average for the S&P 500 over the past 35 years, according to the Stock Trader's Almanac. "Valuations were stretched, these names have not taken a breather, and we're going into a tougher season for stocks," said King Lip, chief strategist at Baker Avenue Wealth Management. Other sectors such as consumer staples, healthcare and financials were up on the week, while relative strength for the equal-weight S&P 500 signaled to some investors a possible start of broadening of gains beyond the massive tech stocks that have led indexes higher. Powell's upcoming speech comes as Fed fund futures on Wednesday were indicating an 84% chance that the central bank will cut rates at its next meeting on September 16-17. Investors will be watching to see if Powell gives any indication that the central bank is on track for such a move or if he pushes back on the market's expectation for easing, which could spark volatility. Tech stocks tend to carry higher valuations which could make them sensitive to higher-than-expected interest rates going forward. "There are a lot of people who have overweighted tech, and it has worked for them," said Chuck Carlson, chief executive officer at Horizon Investment Services. "They don't want to get caught on the wrong side of that if in fact, the Fed doesn't do anything in September. So I think that is also causing (investors) to maybe not necessarily get out of tech, but to reduce the overweight a little bit." (Reporting by Lewis Krauskopf in New York; Additional reporting by Suzanne McGee and Laura Matthews in New York, Akash Sriram in Bengaluru and Lucy Raitano in London; Editing by Megan Davies and Matthew Lewis)
United News of India
4 hours ago
- United News of India
Nvidia considering a ‘variety of products' for future as AI chip market competition soars: Reports
New Delhi, Aug 20 (UNI) Nvidia is considering a 'variety of products' for its future roadmap as more competitors are emerging in the AI chip market. Moreover, the development came after Trump's approval of sales expansion to the country. Reportedly, Nvidia could deliver its new chips for testing purposes to Chinese clients. As per the reports, the new chip will be more powerful compared to the predecessors and be based on the 'Blackwell architecture.' The 'Blackwell architecture' of Nvidia is the next-gen GPU technology specifically designed to foster the domains of generative AI and computing. Earlier on Tuesday, the sales of Nvidia fell approx 4 per cent amid heavy tech losses. But now they're slightly gripping the positive mark with the sales optimism in China. UNI SAS RN
The Hindu
6 hours ago
- The Hindu
Historic Swedish church arrives at new home after two-day journey
A landmark Swedish church arrived on Wednesday (August 20, 2025) at its new home after a two-day move across the Arctic town of Kiruna, in a move to allow Europe's largest underground mine to expand. The red wooden Kiruna Kyrka, which dates from 1912 and weighs 672 tonnes, completed its five-kilometre (three-miles) journey around 2:30 p.m. (1230 GMT). A musical fanfare celebrated its arrival after a meticulously choreographed relocation that began on Tuesday on two remote-controlled flatbed trailers inching forward at a pace of half a kilometre an hour. Kiruna's entire town centre is being relocated because of the giant LKAB iron ore mine, whose ever deeper burrowing over the years has weakened the ground. A stone's throw from where the structure was inching into place next to the town's cemetery, Lutheran vicar Lena Tjarnberg held a church service for dignitaries in a tent resembling a "laavu", the traditional tent of the region's Indigenous Sami people. "Our beloved, beloved church began its journey yesterday from its unbelievably beloved location. Now it is on its way home," she said. The journey went smoothly for the 1,200-tonne convoy, despite some tricky narrow passages and 90 degree turns, officials said. The relocation has generated widespread interest, with large crowds thronging the streets of the town of 18,000 people. Lisa Weber, a 26-year-old real estate agent, had travelled from her home in Germany to Kiruna to be able to witness what she called a "historical" event. "It's something that you do once in your life, or see once in your life, and it's such a long distance from the old place to the new place," Ms. Weber told AFP, adding it was "very interesting" to see the elaborate process. LKAB said the new location had been "chosen with great care to preserve its character and connection to the surroundings." "The building has been rotated 180 degrees, meaning that the altar now faces west — a symbolic choice that opens the church towards the city and its residents," the state-owned company said in a statement. LKAB added it was attempting to create a "cohesive whole" with other cultural buildings set to be moved. King Carl XVI Gustaf took part in Wednesday's festivities, exchanging a few words with driver Sebastian Druker, an Argentinian, who controlled the trailers remotely with a joystick. The 79-year-old king was also expected to take part in an attempt to break the world record for the number of people attending a "kyrkkaffe", a coffee break in conjunction with a church service. The town's relocation process began almost two decades ago and is expected to continue for years to come. The new town centre was inaugurated in September 2022. Criticism The company offered to financially compensate those affected by the town's relocation, or rebuild their homes or buildings. A total of 23 historic buildings have already been moved before the church, according to LKAB. Yet many Kiruna residents are unhappy. Alex Johansson and Magnus Fredriksson, who host a podcast on local Kiruna news, were critical of the mining company. "LKAB maybe didn't read the room so well when they destroyed the whole town and then they stage this huge street party for the people," Mr. Fredriksson told broadcaster SVT, watching as the church rolled slowly down the road. "It's like they said 'Here's some storage space for you, Kiruna. Now we're going to continue raking in the billions from here'," Mr. Johansson added. They were happy the church had at least been saved, and hadn't ended up "as woodchips like the rest of Kiruna". Iron ore, rare earths LKAB, which is extracting iron ore at a depth of 1,365 metres, announced in 2023 that it had discovered Europe's largest known deposit of rare earth elements right next to the Kiruna mine. Rare earths are essential for the green transition, used in the manufacturing of electric vehicles. LKAB chief executive Jan Mostrom told AFP the deposit was "very important for Europe", as the continent seeks to reduce its dependence on imports from China. Activists argue the mining operations destroy the area's pristine forests and lakes and disturb traditional Sami reindeer herding in the area. The relocation of the church alone was expected to cost LKAB some 500 million kronor ($52 million). Designed by Swedish architect Gustaf Wickman, the church, which measures 40 metres (131 feet) tall, is a mix of influences and includes designs inspired by the region's Indigenous Sami people on the pews. The neo-Gothic exterior features slanting roofs and windows on each side, while its dark interior has elements of national romanticism as well as an Art Nouveau altarpiece and an organ with more than 2,000 pipes. The church's handblown glass windows were removed ahead of the move, replaced with painted plywood. The belltower, which stood separately next to the church, will be moved next week.
