Death Cross Panic: Are Zero-Day Puts Driven by Confusion?

Ladies and Gentlemen, let me tell you something: the market is a wild beast, and it's showing its teeth again with the "death cross" on Nvidia's chart. This technical warning sign flashed on March 20, 2025, and it's got everyone talking. But here's the thing: not everyone knows what they're talking about. In fact, some traders might be reacting without truly understanding the stock or the signal. They don't know the difference between Nvidia and Nivea!

Let's break it down. Nvidia has had a monster run since October 2022, surging 948%. That's right, folks, 948%! So, when the stock triggers a "death cross," it's going to grab attention. But does it spell doom? Not necessarily. Back in April 2022, Nvidia also flashed a death cross, and the stock went on to fall 47% before bottoming out. Naturally, investors are wondering if history is about to repeat itself.

But here's the thing: the market is not always predictable. And the "death cross" is not always a reliable indicator of a prolonged downtrend. In fact, the S&P 500 index was higher a year after the death cross about two-thirds of the time, averaging a gain of 6.3% over that span. So, while the "death cross" can signal market weakness, it is not always a reliable indicator of a prolonged downtrend.

Now, let's talk about zero-day options. These are options contracts that expire on the same day they are traded. They've gained significant popularity among traders due to their potential for high returns and low costs. But they also come with substantial risks. For example, if a trader buys a $20 call option on a $20 stock for $0.10, and the stock price rises to $22 by the end of the day, the option could be worth $2,000, resulting in a 1,900% return on investment. But if the stock price remains below $20 at the end of the day, the trader will lose their entire investment.

So, what's the deal with zero-day puts on Nvidia? Are traders blowing them out or pressing their bet because of the death cross? Or are they just following headlines and reacting without truly understanding the stock or the signal? It's a valid question, and one that's worth considering.



In conclusion, the "death cross" on Nvidia's chart is a technical warning sign that's got everyone talking. But not everyone knows what they're talking about. And zero-day options, while they offer the potential for high returns, also come with substantial risks. So, do your research, stay informed, and don't be afraid to take calculated risks. But remember: the market is a wild beast, and it's showing its teeth again. So, be prepared for anything!