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#STOCKS: #NVDA, #TSLA
#MACRO: #SP500
The S&P 500 finished up around 20 bps, while the NASDAQ 100 closed up by around 80 basis points. Most of the movement in both indices can be attributed to Tesla, which rose by about 20% today. The Bloomberg 500 likely provides the clearest breakdown of the price action, allowing us to see the individual stock impacts on the broader market.
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With Tesla’s stock surging, Nvidia suddenly became less appealing to traders. Call volume for Nvidia collapsed, with only 1.7 million contracts traded today compared to the 20-day average of 2.5 million.
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Even total volume in Nvidia was down for the day, dropping 31% compared to its 20-day average.
Things appeared to have shifted to Tesla, with the stock up more than 20% on the day—it makes sense. Call volume more than tripled during the session.
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This could be a significant development. If the option “rounders” have found a new target in Tesla, it could significantly impact the overall market. Tesla’s weighting in the Bloomberg 500 is only 1.46%, compared to Nvidia’s at 6.75%. For Tesla to have the same impact as Nvidia, rising by 1%, Tesla would need to rise by almost 5%.
If option players shift to Tesla, regardless of whether the trade is profitable or not, Tesla’s impact on the index will not be as severe. A loss of interest in Nvidia could potentially lead to its stock declining, something to keep in mind.
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On all those days when Nvidia was swinging 3%, 4%, or 5%, it had the equivalent impact of Tesla rising by 10% to 20% in a single day! There have been plenty of those days, with the massive effect on the market.
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Nvidia’s market cap is $3.445 trillion, compared to Tesla’s at just $840 billion. This means Nvidia is about four times bigger than Tesla by market cap. As a result, Tesla’s stock would need to rise significantly to match the impact that Nvidia’s daily trading action brings to the market. So, it will be important to keep track of where the option volumes gravitates to from here.
-Mike
Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.
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This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.