There is a simple reason why Nasdaq-100 Index closed at new records on Friday: the largest company in the world achieved its first record since May.
Nvidiawhich represents 13% of the Nasdaq and 8% of the S&P 500 Indexadded 1.3% on Friday, ending seven weeks of sideways trading surrounding a high-stakes meeting between President Donald Trump and business executives leading what Trump calls “super intelligence.”
The rally puts the value of Jensen Huang’s semiconductor business at just under $5.7 trillion, and based on the price of options traded at Nvidia, it will likely cross the $6 trillion threshold by the end of this month. This should be a comforting notion for stock bulls.
Currently, there’s about a 50% chance Nvidia hits a $6 trillion valuation by the end of this month, and a 13% chance that happens this week, based on prices of deltas on Nvidia options expiring this week and Oct. 30, which measure the sensitivity of the options price to movements in the stock. The chances of this happening by December 18 are about 67%.
They also suggest that there is about a 1 in 16 chance that Nvidia will reach $7 trillion by November 20. Based on the stock’s current tally, Nvidia would need to hit $248 to hit the milestone.
Nvidia, year to date
“The announcement of the Nvidia buyout was a positive,” Ben Emons, managing director of Highline Asset Management, wrote in a note to clients last week. “The buyout is not just a payment but a capital allocation event that builds confidence in long-term AI demand.”
It is important to note that when using deltas to assess a range of possibilities, it is just as likely that a move of the same size in the opposite direction is just as likely. While this is largely the case for Nvidia, some stock call options currently trade with higher implied volatility than equivalent puts, according to Barchart data. Such “buy bias” is a sign that traders tend to hedge in the event of a rally.
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