Nvidia Stock Rises. J.P. Morgan Sees an Options Opportunity.

Nvidia is the dominant provider of artificial-intelligence chips. (Courtesy NVIDIA)

Key Points

• Nvidia shares rose 0.7% to $176.29 on Monday, following a 6.2% decline over the past month.
• J.P. Morgan maintains an Overweight rating and a $250 target price on Nvidia, citing its substantial order pipeline.
• Analysts recommend selling Nvidia put options with a $160 strike price, expiring March 2026, for a premium of $8.50 per share.

Nvidia stock gained on Monday after a couple of bad weeks. Now, analysts at J.P. Morgan see an options opportunity in the selloff.

Shares of Nvidia ended up 0.7% at $176.29. Nvidia stock has fallen 6.2% over the past month amid concerns about competition from Google’s Tensor Processing Units.

However, J.P. Morgan analysts have an Overweight rating and $250 target price on Nvidia stock, based on its “immense” order pipeline. And they see an options trade that can take advantage of the recent weakness—and volatility.

“Sell Nvidia puts as a target buy strategy to take advantage of elevated volatility, as recent worries about Nvidia’s chip dominance seem overdone,” wrote J.P. Morgan analyst Bram Kaplan in a research note.

A put option gives investors the right to sell a stock at a certain price and time. Selling a put option on Nvidia means an investor will be paid a premium to agree to buy the stock at a set strike price.

Specifically, Kaplan and his colleagues recommend selling puts on Nvidia stock with a strike price of $160, expiring in March 2026. If the stock trades below that level, the seller of the put option would be forced to buy the stock. But because the options carried a premium of $8.50 a share at the time of the publication, a seller would be in the money on the trade as long as Nvidia stock remains above $151.50, Kaplan writes.

Separately, Nvidia said Monday that it was debuting its Nemotron 3 family of open artificial-intelligence models. The company said the release would enable startups to build and iterate faster on AI agents.

Among other chipmakers, Advanced Micro Devices was little changed, while Broadcom, which dropped 11% on Friday after a poorly received earnings report, was down another 3.6% in morning trading.

Write to Adam Clark at adam.clark@barrons.com