Nvidia shares dip as OpenAI growth doubts rattle AI trade, but options traders bet on rebound

Key facts

• raised questions about OpenAI's growth targets.
• Options traders spent $648 million on calls versus $170 million on puts, a ratio of nearly 4:1.
• Total options premium on Nvidia reached $818 million on Tuesday, with call volume more than double put volume.
• The at-the-money straddle expiring May 29 implies an expected move of at least 10% by next month.
• A large trade involved a 200/260 call spread expiring March 2027, betting Nvidia shares reach $260, 21% above current levels.
• Nvidia options had been cheaper than those in the VanEck Semiconductor ETF until Tuesday, when implied volatility rose.
• Traders are using spreads rather than outright calls, indicating a more measured approach compared to some peers.

Sell-off sparked by OpenAI concerns

Shares of Nvidia fell on cast doubt on OpenAI's growth projections, sending ripples through the AI complex. The decline, though modest, broke a period of relative calm for the chipmaker's stock, which had traded in a tight range for much of the past year. raised questions about whether OpenAI can sustain the revenue growth that has fueled investor enthusiasm for AI infrastructure. As the dominant supplier of graphics processing units for AI training, Nvidia is directly exposed to any reassessment of demand from major AI labs. Options traders quickly interpreted the dip as a buying opportunity, piling into bullish bets with a conviction that the sell-off is temporary.

Options market flashes bullish signal

On Tuesday, total options premium on Nvidia reached $818 million, with $648 million spent on calls and just $170 million on puts — a call-to-put ratio of nearly 4:1. Call volume more than doubled put volume, according to data from SpotGamma. The surge in activity pushed implied volatility higher, reversing a trend where Nvidia options had been cheaper than those in the VanEck Semiconductor ETF. Traders now expect an at-the-money straddle expiring May 29 to deliver a move of at least 10% by the end of next month, a week after earnings. Despite the bullish tilt, traders are taking a more measured approach than in some other high-growth stocks. The largest trades were spreads that combine buying and selling calls, rather than outright long calls.

Spread trade targets $260 by March 2027

One notable transaction involved a buyer of a 200/260 call spread expiring in March 2027. The trade is a bet that Nvidia shares will reach $260 by that date, representing a 21% gain from Tuesday's closing level. Such long-dated spreads allow traders to express a bullish view while capping risk and reducing premium outlay. The structure suggests confidence in Nvidia's long-term trajectory, even as near-term uncertainties around AI spending linger. Nvidia is confronting a new challenge even as overall AI spending continues to increase. The company must navigate potential shifts in demand from key customers like OpenAI, which are under pressure to demonstrate returns on massive capital investments.

AI spending remains robust despite growth questions

The broader AI investment cycle shows no signs of abating, with major technology companies and venture capital firms committing ever-larger sums to infrastructure. Nvidia's GPUs remain the backbone of most large-scale AI deployments, giving the company a dominant position. However, the highlights a growing scrutiny of the revenue models of AI startups. OpenAI, in particular, faces questions about whether its growth targets are achievable, which could temper the pace of future GPU orders. Investors are weighing these risks against the still-rising tide of AI spending. The options market's reaction suggests that, for now, the bullish case for Nvidia outweighs the concerns.

What comes next: earnings and volatility ahead

earnings in late May, an event that options pricing suggests could trigger a double-digit swing in the stock. The at-the-money straddle expiring May 29 implies an expected move of at least 10%, reflecting uncertainty around the company's guidance. Traders will be watching for any commentary on demand from cloud providers and AI labs, as well as updates on the ramp of new products like the could propel Nvidia back toward its all-time highs. For now, the options market is betting on a rebound, but the use of spreads rather than outright calls indicates a cautious optimism. The next few weeks will test whether the dip was a buying opportunity or the start of a deeper correction.

The bottom line

• questioning OpenAI's growth targets, but the decline was modest and options traders responded with heavy call buying.
• Options activity on Tuesday was overwhelmingly bullish: $648 million in calls vs. $170 million in puts, with call volume more than double put volume.
• Implied volatility rose, and traders now expect at least a 10% move by late May, around Nvidia's earnings report.
• A large spread trade bets Nvidia will reach $260 by March 2027, a 21% gain, reflecting long-term confidence.
• Despite the sell-off, AI spending continues to increase, but the sustainability of growth at key customers like OpenAI is under scrutiny.
• Nvidia's earnings in late May will be a critical catalyst, with options pricing pointing to significant volatility.