KUALA LUMPUR, June 12 (Bernama) -- Selected blue-chip counters trading at attractive valuations helped Bursa Malaysia close higher on Friday, despite cautious market sentiment driven by developments in West Asia, volatility in crude oil prices and uncertainty over the global interest rate outlook. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 4.10 points or 0.24 per cent to 1,683.63 compared with Thursday's close of 1,679.53. The key index opened 5.34 points stronger at 1,684.87 earlier today and moved between 1,679.72 and 1,685.39 throughout the session. Market breadth was negative, with losers leading gainers 533 to 479, while 561 counters were unchanged, 1,130 untraded and 33 suspended. Turnover fell to 2.79 billion units worth RM2.31 billion from 3.32 billion units worth RM2.88 billion yesterday.
As Nvidia (NVDA.US) gears up to report FY26 Q2 earnings after the bell on Wednesday, August 27, the options market is showing unusual calm compared to past quarters — a signal that traders are pulling back from aggressive bets amid a cooling volatility landscape.
Implied Volatility and Expected Move Dip Below Average
Implied Move: The options market is pricing in a ±7.01% post-earnings move, below the 12-quarter average of 8%.
Implied Volatility (IV): Currently sits at 48%, ranking only in the 39th percentile over the past year — a clear sign that expectations for big earnings-day swings are fading.
Put Skew: Remains flat near zero, meaning no elevated pricing for downside protection — a sharp contrast to the usual cautious buildup ahead of earnings.
Interpretation: Market sentiment is leaning toward stability or neutrality, lacking signs of large speculative positioning.
Option Open Interest Trends at 1-Year Lows
Total Open Interest for options expiring Aug 29 has fallen to a 12-month low, further reinforcing a lack of speculative buildup.
Put/Call Ratio stands at 0.80 — reflecting slightly more call open interest, but not significantly skewed.
Max Open Interest Levels:
Calls: Most open at $185 and $190
Puts: Concentrated around $150 and $160
Max Pain: Currently sits at $170, suggesting that’s the level where most option contracts expire worthless.
Conclusion: There’s a lack of directional conviction — both bulls and bears appear cautious, opting to sit on the sidelines or play defense.
Option Strategy Spotlight: Short Put for Income + Defensive Entry
With low volatility, selling premium becomes more attractive than buying it. Here’s a conservative approach for investors who remain long-term bullish on Nvidia but are hesitant to buy at current prices.
Short Put Strategy
Sell the $160–$170 strike put expiring Aug 29 or Sep 19
These strikes offer:
10–15% downside buffer
Liquid contracts with high open interest
A chance to collect income while potentially buying NVDA at a discount
Why It Works:
Low IV suppresses long option premiums — reducing upside potential from buying calls or straddles.
This strategy allows you to earn premium while waiting for a better entry point.
Works best for those who are comfortable owning NVDA if the stock dips.
Market Implication
The absence of strong directional plays or defensive hedging suggests that the options market is betting on stability, even as Nvidia remains at the heart of the AI infrastructure rally. Investors are watching for updates on GB200 shipments and early outlook for GB300, which could reignite momentum — or disappoint lofty expectations.
Until then, premium-selling strategies like short puts may offer the best way to play this earnings season.
Comments
Post a Comment