To The Moon

NVDA, AVGO See Heavy Put Selling as Traders Bet on a Range

During Friday’s session, the options market saw sizable deep out-of-the-money put activity in $NVIDIA(NVDA)$   and $Broadcom(AVGO)$  . The trades were executed largely at the bid and came against extremely low prior open interest, suggesting new positions were being established. Structurally, the activity points to a neutral-to-bullish strategy in a choppy market environment: selling far out-of-the-money puts to collect time premium, while retaining the ability to accumulate shares should an extreme pullback occur.

Starting with AVGO, roughly 4,610 contracts of the March 2026 $245 put traded, generating about $890,000 in premium. Prior open interest stood at just 86 contracts, making it highly likely this was fresh positioning. With Broadcom trading near $327 at the time, the $245 strike sits about 25% below the current price. The option carried a delta of just -0.06, placing it firmly in deep out-of-the-money territory. From a risk-reward standpoint, the structure suggests institutional investors expect the stock to remain range-bound over the coming months, with limited probability of a systemic decline — but also without a compelling catalyst for a sharp breakout. In that context, selling distant puts becomes a way to harvest time decay in a consolidation phase.

Nvidia showed a similar pattern. About 1,500 contracts of the March 2027 $130 put traded for approximately $1.62 million in premium, against prior open interest of just 14 contracts — again signaling new positioning. With NVDA trading around $184, the $130 strike lies nearly 30% below spot. As a long-dated LEAPS contract deep out of the money, this trade appears less about a willingness to “catch the bottom” and more about volatility and time-value positioning. So long as Nvidia avoids a structural breakdown over the next two years, the seller stands to benefit from ongoing time decay and potentially from a normalization in implied volatility.

Fundamentally, capital expenditures among major technology companies have not shown signs of slowing. On the contrary, the AI infrastructure race continues to accelerate. Alphabet, Meta, Amazon, and Microsoft have all either maintained or increased elevated spending levels in their latest earnings reports, with data-center expansion and AI compute deployment moving into a scaled phase. There is little evidence, at this stage, of a break in underlying demand.

Yet equity performance does not always move in lockstep with capital spending. After a period of significant multiple expansion, much of the semiconductor sector's growth narrative appears well priced in. Earnings growth may gradually transition from explosive acceleration to a more normalized plateau. In such an environment, stocks are more likely to trade in elevated ranges rather than sustain uninterrupted upward momentum. Selling deep out-of-the-money puts to collect premium reflects a classic “range-market income” approach rather than a directional bet.

Against a backdrop of continued AI investment but already-rich valuations, investors may consider a balanced approach. Longer-term believers in AI infrastructure can scale into positions gradually or add on meaningful pullbacks rather than chase strength. Meanwhile, options-savvy investors with higher risk tolerance may explore deep out-of-the-money put structures or covered-call strategies to generate time-decay income in a range-bound market.

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