Tariff Fears Drag Nvidia Stock Down 8%; Options Pop

Nvidia's stock price took a significant hit on Monday, March 4, 2025, as tariff fears and geopolitical tensions weighed on investor sentiment. The stock fell by nearly 9%, extending its losses from the previous week, which were fueled by concerns about Chinese startup DeepSeek's low-cost AI model. This decline in Nvidia's stock price has led to a surge in options trading activity, with investors positioning themselves to capitalize on potential market movements.



The Trump administration's announcement of tariffs on major trading partners, including Mexico, Canada, and China, has sparked concerns about a potential global trade war. These tariffs could impact Nvidia's business due to its exposure to international markets, leading to increased uncertainty and volatility in the stock market. As a result, options traders have been actively participating in the market, either to hedge their positions or speculate on the stock's potential movements.



On Monday, March 4, 2025, Nvidia's options trading volume surged to its highest level since August 2023, with the highest trading volume recorded on that day. This increase in options trading volume coincided with a decline in Nvidia's stock price, which fell more than 2% to around $117 in late trading. The surge in options trading volume suggests that institutional investors were actively participating in the market, either to protect their portfolios from potential losses or to capitalize on the stock's volatility.

Options traders have been positioning themselves in response to the recent decline in Nvidia's stock price by employing various strategies such as increased put activity, straddle and strangle strategies, vertical spreads and horizontal strategies, and butterfly and condor strategies. These strategies reflect their expectations of increased volatility, a continued decline in the stock price, or a range-bound stock price.



As Nvidia's stock price continues to decline, investors should watch key support and resistance levels to identify potential entry or exit points. Some of the key support levels include $96, $76, and $50, while important resistance levels are around $130 and $150. These levels are based on historical price action and moving averages, providing a framework for investors to make informed decisions.

In conclusion, tariff fears and geopolitical tensions have significantly impacted the options market for Nvidia, with a notable increase in options trading activity and a shift in the options market's sentiment. As Nvidia's stock price declines, investors should be aware of the various options trading strategies employed by options traders and monitor key support and resistance levels to capitalize on potential market movements. By staying informed and adaptable, investors can better navigate the dynamic relationship between Nvidia's stock price performance and options trading volume.