The search for the “next Nvidia” is drawing options traders to Arm’s soaring stock

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – Hype over artificial intelligence stocks led options traders to step up their bets on Arm Holdings on Monday, with many hoping for further gains in the shares after its price nearly doubled in less than a week.

Shares of Arm Holdings have risen 80% since Wednesday after the company forecast better-than-expected quarterly results due to demand for its technology to develop chips for artificial intelligence functions.

The jump in the share price has boosted trading in the chip designer’s options, with volume rising to about 490,000 contracts per day over the past three sessions. That’s more than 10 times the average daily options trading volume in the month before the earnings report, according to Trade Alert data.

The skyrocketing options volume suggests investors are looking for the “next NVIDIA,” said Chris Murphy, co-head of derivatives strategy at Susquehanna Financial Group, noting that the surge in bullish options activity is likely contributing to boost the stock.

Chip heavyweight Nvidia, which is at the center of the artificial intelligence frenzy, is up about 220% in the last year, making it the best-performing S&P 500 stock over that period.

On Monday, 600,000 Arm contracts changed hands by 2:15 p.m. (1915 GMT), with daily volume expected to hit a record 816,000 contracts, according to data.

With Arm shares rising 20% ​​to $137.72 on Monday, call options on the shares, which rose above $185 on Friday, were the most actively traded Arm contracts. Call options give the right to buy shares at a set price in the future, while puts give the right to sell shares.

The rise in Arm’s stock price has led to massive gains in recent bullish options bets. For example, a trader who bought about 5,000 January 2026 ARM calls for about $12.2 million on February 7 saw the value of those contracts increase to about $42 million on Monday, based on their last Trade price. Despite those gains, the trader appeared to be holding on to those call options, a positive sign for the stock, Murphy said. ARM puts were also busy on Monday, perhaps indicating that some investors are looking to lock in some of the shares’ recent gains, he said.

Arm’s technology isn’t used directly in AI work, but companies like Nvidia are turning to it for central processing units to complement their AI-specific chips.

(Reporting by Saqib Iqbal Ahmed; Editing by Ira Iosebashvili and David Gregorio)


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