Chip behemoth Nvidia Corp (NASDAQ:NVDA) is 0.4% lower to trade at $166.84 this afternoon, headed for its eighth loss in 10 sessions. NVDA has been pulling back since tapping a record high of $212.89 in October, most recently stuck in a channel of choppy trading between $170 and $190. Despite a 10% year-to-date deficit, all hope may not be lost, as the pullback has the stock testing a historically bullish trendline.
Per Schaeffer's Senior Quantitative Analyst Rocky White, Nvidia is now within 0.75 of the 260-day moving average's 20-day average true range (ATR), after remaining above it 80% of the time in the last two weeks and in 80% of the last 42 trading sessions. This signal has occurred five other times over the past 10 years, after which NVDA was higher one month later 80% of the time, with an average 14.7% surge. From its current perch, a jump of this magnitude would put the shares back at $191.
Bears are growing bolder in the options pits, per the equity's 10-day put/call volume ratio of 0.72 over at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 98% of annual readings. Should this bearish attention begin to unwind, it could trigger more tailwinds for the shares.
Premium selling is the way to go at the moment, per the stock's Schaeffer's Volatility Scorecard (SVS) comes in at 14 (out of 100). In simpler words, shares have consistently realized lower volatility than its options have priced in over the past 12 months, making NVDA the perfect premium selling candidate.
