Frenzy Over AI Drives Doubling of Chip Maker Options Trading

• Nvidia accounted for 80% of SOX options trades in February
• Options trading last month jumped sevenfold from year earlier

Options trading in semiconductor stocks is exploding as investors bet on the hottest thing in equity markets these days: artificial intelligence.

Daily average notional volume in single stock puts and calls for members of the Philadelphia Semiconductor Index exceeded $145 billion in February. That’s about double the average at the end of 2023 and seven times higher than a year earlier.

Nvidia Corp., the chip maker at the heart of the AI bull market, accounted for almost four-fifths of the trades. Last year, Nvidia’s market value soared by almost 240%. It’s up 85% in 2024, pulling the semiconductor index up by more than 23%.

Options trading is a typical component of big stock-market moves, but the rapid expansion may be a sign investors who missed out on last year’s rally are playing catch up. Plus, options offer not only a way of wagering on further gains in chip makers, but also provide protection should the rally run out of steam.

Written by: Jan-Patrick Barnert @Bloomberg

The post “Frenzy Over AI Drives Doubling of Chip Maker Options Trading” first appeared on Bloomberg

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