NVIDIA’s stock jumped on July 15th, rising about 4% after it renewed sales of its H20 AI chips to China. This increase came as the market reassessed NVIDIA’s revenue potential, following reassurances from the U.S. government that eased previous uncertainties. On July 14th, NVIDIA’s stock approached important resistance levels, causing some traders to expect a downturn. However, the positive news on July 15th shifted this expectation. The stock’s price rose, surprising bearish traders and supporting a bullish trend, backed by a strong positive delta of +41 million.

Institutional Buying in Mid July

In mid-July, there was significant institutional buying, peaking on July 15th, with a trading volume of 189 million shares and aggressive buying activity. This was supported by a positive Delta, showing that buyers were in control. While the outlook remains bullish, traders should exercise moderate caution regarding profit-taking. Even though NVIDIA appears strong, the buying momentum has slowed in recent sessions (July 16–18). Decreasing trading volume and lower Delta readings indicate a possible consolidation period ahead. Our proprietary AI analysis gives a +5 bullish score, suggesting caution while allowing for mild profit-taking. Key price levels to watch include an anchored VWAP at $170.44 and breakout support at $170. Holding above these levels will support the bullish sentiment. However, falling below these could lead to a drop to $166. While the broader market shows some cooling, NVIDIA remains strong, so careful analysis is vital rather than quick selling. Traders should use smart analytic tools for informed trading decisions, recognizing that no single method is foolproof. A solid analysis of technical patterns and fundamental events will help guide market actions.

Opportunities for Derivative Traders

Our analysis indicates that the sustained bullish sentiment, tempered with caution, offers specific chances for derivative traders. The slowing buying momentum suggests that strategies like call debit spreads could be beneficial. This strategy allows participation in potential upside from resumed sales in China while limiting maximum risk, which is wise given the overall cooling in the tech sector. Current options data supports this balanced strategy, as the put-to-call ratio for the stock remains low, meaning more traders expect a rise rather than a fall. However, since the spike on July 15th, implied volatility has decreased, making it appealing to sell premium. This approach aligns with disciplined risk management principles. It might involve selling covered calls against existing stock positions to generate income during potential consolidation. We see the critical support level around $170 as a strategic point for options trades. Selling cash-secured puts just below this level allows you to collect premiums while the stock holds steady. A confirmed break below this price, especially with increasing negative delta, would be a signal to consider buying protective puts for hedging long positions. The market’s response to other high-performing stocks reminds us that positive news doesn’t always lead to continued rallies. Historically, after sharp increases, NVIDIA’s stock often moves sideways for a while before its next rise, a trend noted in late 2023. This range-bound environment would be ideal for time decay strategies, like iron condors, should a clear trading channel form. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now