Barchart Pitches $2,680 Nvidia Straddle on Low Volatility

Barchart has outlined a November options trade on Nvidia that would cost $2,680 per contract and needs a substantial share-price move to pay off. The proposed long straddle pairs a $230 call with a $230 put, both expiring November 20.

Nvidia closed at $228.87 on September 22, leaving the strike close to the stock price. At expiration, the trade breaks even below $203.20 or above $256.80, according to Barchart’s calculations.

Those levels are about 11% away from the closing price in either direction. The trade’s maximum loss is the $2,680 premium if Nvidia finishes at $230 on expiration; gains are possible above the upper break-even, while downside gains are limited because a stock cannot fall below zero.

The idea is based on options priced for relatively subdued volatility. Barchart reported Nvidia’s implied volatility at 32.69%, near its 12-month low of 30.96% and below its 12-month high of 54.94%. Implied volatility reflects how much movement options prices anticipate.

A long straddle is not a bet on whether Nvidia rises or falls. It buys both directions at once, aiming to benefit from a large move or a rise in option prices; Barchart estimated the setup’s probability of profit at 42.6%.

The cost is time. If shares stay near the strike, both options can lose value as expiration approaches. A fall in implied volatility can also reduce the position’s value, even if Nvidia’s share price barely changes.

Barchart’s proposal suggested reassessing the position by mid-October if no major move occurs. The key test is whether Nvidia’s price or volatility shifts enough to overcome the premium paid before November 20.