Nvidia nears $6 trillion milestone as options traders eye October surge

Nvidia's recent rally has pushed the Nasdaq-100 Index to new highs, with the semiconductor giant accounting for 13% of the Nasdaq and 8% of the S&P 500 Index. The company, led by CEO Jensen Huang, added 1.3% in value on Friday, ending a seven-week period of sideways trading that followed a high-stakes meeting between President Donald Trump and tech executives discussing "super intelligence." The rally brings Nvidia's valuation close to $5.7 trillion, with options traders predicting a likely crossing of the $6 trillion mark by the end of this month.

Market data indicates a 50% chance Nvidia will reach a $6 trillion valuation by the end of October and a 13% chance it could happen this week. The probability increases to 67% by December 18. Additionally, there's a 1-in-16 chance the company could hit a $7 trillion valuation by November 20. To reach the $6 trillion milestone, Nvidia's stock would need to hit $248 per share.

Analysts note that Nvidia's stock buyback announcement has boosted investor confidence, signaling strong long-term demand for AI. Ben Emons, managing director at Highline Asset Management, highlighted the buyback as a key positive, emphasizing its role in capital allocation and expressing confidence in AI demand. However, traders should be cautious as the same size move in the opposite direction is also possible. Currently, some call options are trading with higher implied volatility than puts, indicating a bias toward hedging for a rally.