To The Moon

The battle for $NVDA$ at 130 this week will be intense.

Monday's battle was unexpected, with institutions not closing their sell calls, and NVIDIA closing below 134. Short sellers entered during trading hours, positioning for a pullback below 130 this week.

Surprisingly, there was unusual heavy opening of bullish doomsday options above 140.

Possible reason 1: The chance of institutional short squeeze seems to have attracted bullish traders, such as the leading position in 140 calls $NVDA 20250214 140.0 CALL$ , with 53,000 contracts opened, worth approximately $4 million.

$4 million is a significant position in doomsday options. Can this trade succeed?

If betting on an institutional squeeze, the probability is low. Based on unclosed positions, NVIDIA will likely stop at 136 after breaking 134.

Possible reason 2: The buyer of 140 calls is betting on $SMCI$ earnings, hoping positive results will drive NVIDIA higher. This would explain other out-of-money call option openings above 140.

Regardless of the 140 calls' success, this position has raised this week's price floor, increasing the probability of closing at 130 on Friday, with worst case at 125.

So how good will SMCI earnings be? Let's look at option positions:

At first glance, there are many bullish institutional positions in the top three.

April 40 calls $SMCI 20250417 40.0 CALL$  are institutions rolling February 30 calls.

Note that while 30 calls traded 24,200 contracts, only 17,000 were rolled. They probably think the previous rally was excessive and earnings won't drive much upside.

44 and 50 calls are institutional weekly bull spread strategy, selling 44 $SMCI 20250214 44.0 CALL$  buying 50 $SMCI 20250214 50.0 CALL$ . The high 50 hedge suggests caution, with implied upside around 5%.

Though institutions have been squeezed before, strong earnings are likely but not guaranteed.

So SMCI earnings may be good tomorrow, but upside is limited by recent gains. NVIDIA is unlikely to break 140 this week but should continue steady gains over next two weeks.

$SPDR S&P 500 ETF Trust(SPY)$

A notable SPY position opened: $SPY 20250218 590.0 PUT$  with about $1 million in puts at 590. A pullback in this choppy market wouldn't be surprising.