Nvidia Plummets 2.56% Amid China H200 Approval Hype: Is This a Buying Opportunity or a Warning?

Summary
• Nvidia (NVDA) trades at $184.265, down 2.56% from its previous close of $189.11
• China’s partial approval of H200 AI chip imports sparks mixed market reactions
• Piper Sandler reiterates $225 price target, but shares trade near 5-year valuation lows

Nvidia’s stock faces a sharp intraday decline despite a regulatory breakthrough in China, where the H200 AI chip import authorization is expected to boost earnings. The stock’s 2.56% drop contrasts with bullish analyst sentiment and a valuation discount to its 5-year average. With the sector leader AMD also down 2.83%, investors are weighing whether this selloff reflects short-term volatility or a strategic entry point.

China H200 Approval Sparks Paradoxical Sell-Off
Nvidia’s 2.56% intraday drop defies the positive implications of China’s partial H200 AI chip import authorization. While the move could unlock new revenue streams, the market’s reaction suggests skepticism about the geopolitical risks and the chip’s competitive positioning. The H200, now two generations behind the Vera Rubin platform, raises concerns about China’s aggregate compute access. Additionally, the requirement for upfront payments and non-cancelable orders may signal supply constraints, dampening immediate optimism. The sell-off also coincides with a broader sector correction, as AMD and other semiconductors face similar headwinds.

Semiconductor Sector Sinks as AMD Leads the Downturn
The semiconductor sector is under pressure, with Advanced Micro Devices (AMD) down 2.83% as of 19:39 ET. This aligns with Nvidia’s decline, reflecting shared macroeconomic and geopolitical risks. The sector’s struggles are amplified by regulatory uncertainties and a shift in investor sentiment toward more defensive assets. While Piper Sandler and JPMorgan remain bullish on long-term AI-driven demand, the immediate market reaction underscores caution about near-term execution risks and valuation multiples.

Options and ETFs to Capitalize on NVDA’s Volatility
• 200-day average: 161.55 (well above current price)
• RSI: 65.22 (neutral, not overbought)
• MACD: 1.49 (bullish divergence from signal line)
• Bollinger Bands: Price at 184.265, near the lower band (171.75–195.49)

Nvidia’s technicals suggest a consolidation phase after a five-month consolidation range. The 200-day average at $161.55 acts as a critical support level, while the RSI at 65.22 indicates no immediate overbought conditions. The MACD’s positive divergence hints at potential upside, but the Bollinger Bands suggest volatility remains contained. For leveraged exposure, the Roundhill NVDA WeeklyPay ETF (NVDW) and Direxion Daily NVDA Bull 2X Shares (NVDU) offer amplified exposure, though both are down 3.16% and 5.18% respectively, reflecting the sector’s weakness.

Top Options Picks:
1. NVDA20260116P170 (Put Option):
- Strike: $170, Expiry: 2026-01-16
- IV: 39.59% (moderate), Leverage: 410.43%, Delta: -0.0836 (moderate sensitivity), Theta: -0.0251 (moderate decay), Gamma: 0.013387 (responsive to price moves), Turnover: $484,001
- Payoff Calculation: A 5% downside to $175.05 would yield a $5.05 profit per contract. This put offers high leverage and liquidity, ideal for a bearish short-term bet.
2. NVDA20260116P175 (Put Option):
- Strike: $175, Expiry: 2026-01-16
- IV: 36.81% (moderate), Leverage: 194.42%, Delta: -0.1637 (strong sensitivity), Theta: -0.0034 (low decay), Gamma: 0.0231 (high responsiveness), Turnover: $660,483
- Payoff Calculation: A 5% downside to $175.05 would yield a $0.05 profit per contract. This put’s high gamma and moderate IV make it a strong candidate for a sharp price drop.

Trading Outlook: Aggressive bulls may consider NVDU for leveraged exposure if the stock breaks above $189.55 (intraday high). For downside protection, NVDA20260116P170 offers a high-leverage, liquid put to capitalize on a potential breakdown to $170.

Backtest Nvidia Stock Performance
NVIDIA (NVDA) has demonstrated a positive performance following a -3% intraday plunge from 2022 to the present. The backtest data reveals that the 3-day win rate is 60%, the 10-day win rate is 59.13%, and the 30-day win rate is 64.78%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 15.28%, which occurred on day 59, suggesting that NVDA can experience significant gains after a brief downturn.

NVDA at a Crossroads: Buy the Dip or Wait for Clarity?
Nvidia’s 2.56% decline, despite favorable China H200 news, highlights the market’s cautious stance on geopolitical risks and valuation. The stock’s technicals suggest a potential rebound from the 200-day average at $161.55, but near-term volatility remains high. Investors should monitor the $170 support level and the Vera Rubin platform’s Q2 2026 revenue ramp. With sector leader AMD also down 2.83%, the broader semiconductor environment remains fragile. For now, a measured approach—using options like NVDA20260116P170 for downside protection or NVDU for leveraged upside—offers a balanced strategy. Watch for a breakout above $189.55 or a breakdown below $170 to confirm the next directional move.