Nvidia edges closer to $6-trillion milestone as options traders bet on rapid growth

Nvidia's recent rally has pushed the Nasdaq-100 Index to new record highs, with the semiconductor giant contributing significantly to the index's performance. The company, which makes up 13% of the Nasdaq and 8% of the S&P 500, added 1.3% in value on Friday, marking its first record since May. This surge has brought Nvidia's valuation close to $5.7 trillion, and options traders predict it could cross the $6 trillion mark by the end of this month.

According to market-maker pricing of deltas on Nvidia options, there is a 50% chance the company will reach a $6 trillion valuation by October 30. The likelihood increases to 67% by December 18. Additionally, there is about a one-in-sixteenth chance Nvidia could hit $7 trillion by November 20, which would require the stock to reach $248 per share.

Analysts view Nvidia's buyback announcement as a positive sign, reflecting confidence in long-term AI demand. Ben Emons, managing director at Highline Asset Management, noted that the buyback is not just a payout but a capital-allocation event. However, while the stock's call options are trading with higher implied volatility than the equivalent puts, traders remain cautious about potential downside moves.