Nvidia has ordered 300,000 H20 chipsets from TSMC, driven by strong demand from China, as reported by sources. This decision shifts from Nvidia’s earlier strategy of relying on its existing stock. To ship these H20 chips, Nvidia needs export licenses from the U.S. government. Although officials assured swift processing in mid-July, the U.S. Commerce Department has yet to approve them, according to sources.

Key Catalyst For Nvidia Stock

The pending export license for the H20 chip is a major factor for Nvidia’s stock in the coming weeks. The uncertainty from the U.S. Commerce Department represents a binary event for traders. This situation is likely to keep implied volatility high, making options pricing sensitive to any news. The political landscape indicates that approval is not guaranteed. The U.S. has been tightening tech export restrictions to China. Announcements of new controls have historically led to sudden, sharp drops in stock prices. A denial could threaten a significant revenue stream, as China has accounted for up to 25% of Nvidia’s data center sales. Conversely, the order for 300,000 units highlights strong underlying demand. If approved, it would confirm Nvidia’s strategy to serve the Chinese market within U.S. regulations, likely resulting in a stock surge. The assurances the company received in July support this positive outlook.

Trading Strategy And Timing

Considering these two possible outcomes, we suggest a smart approach is to purchase volatility. A strategy that includes both call and put options would allow a trader to benefit from a significant price movement, regardless of which way it goes. This approach means the trader doesn’t have to predict the government’s final decision. Timing is critical for these positions. We recommend focusing on options contracts that expire in the next one to two months to match the expected decision timeline. Holding positions longer than necessary could lead to losses due to time decay if there are further delays. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now