Bearish sentiment swept through the semiconductor sector on Friday, with large options trades in Micron and Nvidia drawing particular attention. The Semiconductor ETF (SMH) saw over 180,000 puts traded by midday, compared to just 50,000 calls, with $46 million in premium tied to puts versus $26 million in calls. Notably, 129,000 put contracts appear to have been bought, signaling strong bearish positioning.
In Nvidia, a massive trade caught the eye: someone bought 100,000 180-strike puts expiring January 15 for $21 million. If this is a speculative bet, it would require Nvidia's stock to drop 22% by expiration to pay off.
Micron saw even more unusual activity. While call volumes were 40% higher than average, $270 million in premium was linked to likely put-buying. The most intriguing trades involved deep in-the-money puts expiring in June 2028, with about 125 puts traded at strikes ranging from 2,250 to 2,500, suggesting they were bought. Another 50 trades at the 2,050 strike were likely sold. Micron's shares are currently trading around $1,030.
The net effect of these trades appears to be a $14.5 million bearish spread position with an options delta near -1, functioning like a synthetic short position. Traders often use deep-in-the-money puts instead of shorting stocks to limit risk, as the maximum loss is capped at the premium paid.