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Nvidia Stock Sees Massive Surge After Earnings Report – Can It Continue?

Options market provides clues on the resilience of the stock's 40%+ rally over the past month.

It is a well-known fact that institutional investors, with their sophisticated tools and technology, most often manage to capitalize on a sustained stock rally. However, the question regarding how much steam is left in an already rallying stock is something that puzzles retail investors.

One such dilemma would be NVIDIA Corporation’s (NASDAQ: NVDA) stock movement. Shares of the chip-maker closed 24.37% higher on Thursday after the company reported its quarterly earnings and provided an upbeat forecast that beat Street estimates. So much has been the ensuing enthusiasm that Wall Street went gaga over AI-related stocks and managed to push up the Nasdaq Composite and the S&P 500 from a debt ceiling-induced decline.

SANTA CLARA, CALIFORNIA – MAY 25: A sign is posted at the Nvidia headquarters on May 25, 2022 in Santa Clara, California. Nvidia’s stock rose precipitously after earnings were reported. (Justin Sullivan/Getty Images)

In order to get better clarity about the near-term prospects of Nvidia stock, here’s a look at what the options market is pricing in:

1. Resistance: Nvidia shares closed at $379.80 on Thursday. Options expiring on June 16 show decent open interest build-up at the $400 Call strike, indicating the level may provide some resistance in the near term. Traders might also be considering the fact that the stock has rallied over 40% in just one month, according to Benzinga Pro.

2. Support: Something strange might be happening as far as the support levels are concerned. Options expiring on June 16 indicate relatively higher open interest accumulation at Put strikes between $275 and $300 — levels that are over 20% below the stock’s current closing price. Although the numbers aren’t significant enough to decisively determine a possible support, the pattern could be representing a lack of conviction among traders as to how much short-term correction the stock could undergo following its massive rally in a short time. Better clarity may emerge once open interest numbers improve going ahead.

SAN MATEO, CALIFORNIA – MAY 19: (L-R) TechCrunch Senior Reporter Kirsten Korosec, Sarah Tariq, Vice President, Autonomous Driving Software at NVIDIA, Saswat Panigrahi, Vice President, Strategy, Product Management & Data Science at Waymo, and Yanbing Li, Senior VP, Engineering at Aurora Innovation, speak onstage at TC Sessions: Mobility on May 19, 2022 in San Mateo, California. (Kimberly White/Getty Images for TechCrunch)

Open interest numbers only provide a fair idea about support and resistance. Any major news break or macro event may lead to significant movement in stock prices and a subsequent shift in open interest numbers.

Produced in association with Benzinga. Zenger News does not provide investment advice. All rights reserved.

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