BY ANDREW GIOVINAZZI

August 22, 2023

Yo Pit Crazies,

I took Friday off to drive my boys to college and closed all of my SPDR S&P 500 (Ticker: SPY) put spreads going into the close Thursday. Now I’m back in business!

After a shaky start, things seem to turn around on the Applied Materials Inc (Ticker: AMAT) earnings Friday after the market ran out of reasons to selloff.

Volatility dropped Friday and Monday as we marched back up the SPX curve. This is early and surprising. 

It’s like they leaked the Nvidia Inc. (Ticker: NVDA) earnings early.

The semis are saving the market.

NVDA IV30 Hits a 1 Year High

AI powered the chip rally, and when the market swooned this last week it didn’t take too kindly to NVDA moving back to $400. It made new highs on Tuesday with new highs in volatility.

I wouldn’t say short NVDA, but the IV for the stock is going nuts. I looked last week for strangles and saw the skyhigh IV only to see it move higher since. IV came out of the market Monday, not NVDA, as traders are looking for a reason to hold higher IV. As of now, they can’t.

I think NVDA will beat, not sure how much higher the stock goes though – it’s too close to $500 not to get there. The stock is in rip mode, and post-earnings the broader market IV drops into Friday.

I am leaning short VIX right now, but I did buy a little cheap upside protection in some VIX call butterflies in the Trading Desk. I’m still long VIX puts 5-1 over the upside.

I am going with the lower market volatility … NVDA not included.

To Your Trading Success,

AG