Bears built up positions against semiconductor stocks on Friday, with significant options activity in Micron Technology and Nvidia calling into question the recent move in chip shares. According to ThinkOrSwim and SpotGamma data, more than 180,000 puts traded in the VanEck Semiconductor ETF (SMH) by midday, compared to 50,000 calls. The premium tied to these puts reached $46 million, versus $26 million for calls. SpotGamma data indicates that 129,000 put contracts appear to have been bought by volume.
Barchart data show the ratio of open interest in put contracts to calls for SMH climbed to 1.95, the highest level since the second week of August. The Invesco QQQ Trust experienced a similar trend, with its put-to-call open interest ratio rising to 1.51.
Single-stock trades in Nvidia also drew attention. Just after the opening bell, an entity purchased 100,000 puts with an 180-strike price expiring on Jan. 15 for $21 million. This was the largest options trade in Nvidia that day. For a speculative position of this nature to be profitable, Nvidia shares would need to fall 22% by expiry.
The most complex activity occurred in Micron. While call volumes ran 40% higher than average, SpotGamma data attributed about $270 million in premium to likely put-buying. This divergence is partly explained by a series of trades in deep in-the-money put contracts expiring in June 2028. Micron shares were trading around $1,030 during the session.
The bulk of these trades involved about 125 puts with strikes ranging from 2,250 to 2,500. These transactions were executed closer to the ask price, suggesting they were buys. Conversely, 50 trades at the 2,050 strike were likely sells. Taken at face value, this structure creates a net $14.5 million bearish spread position with an options delta near -1. Such a trade functions like a synthetic short position.
Traders often purchase deep-in-the-money puts instead of shorting stock when borrowing costs are high or when they prefer defined risk. In options trading, the maximum loss is limited to the premium paid. However, analyzing bid-ask spreads can be difficult for far out-of-the-money trades with low open interest and volume.
Jason DeLorenzo, owner and founder of Volland, an options market-structure analytics platform, noted that spreads are hard to categorize using midpoint analysis. Dealers are often willing to accept a lower price on one leg of a spread while securing a better premium on the other, complicating the interpretation of directional intent.