Cathie Wood-led ARK Investment Management began the week by loading up on shares of NVIDIA Corporation (NASDAQ:NVDA) and Advanced Micro Devices, Inc. (NASDAQ:AMD).
New commerce department rules indicate chipmakers should agree not to increase capacity in China for a decade in order to receive money from a $39 billion federal fund designed to build a leading-edge US semiconductor industry, according to an FT report.
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Some of these stocks have gained significantly, with Nvidia up over 62% and AMD shares gaining over 22% since the beginning of 2023. However, the pertinent question is how long will this rally last. Here's a look at how the options market is pricing in their potential trading range for the week.
1. NVIDIA Corporation: The stock closed at $232.16 on Monday. Options expiring on Friday show the build-up of maximum open interest at the $240-Call strike, indicating the level to act as a stiff resistance until Friday. Strong supports for the stock exist at the $220 and $230 levels as indicated by open interest build-up on the out-of-the-money Put options.
2. Advanced Micro Devices: The stock closed at $78.58 on Monday. Options expiring on Friday show maximum open interest build-up on the out-of-the-money Call side at the $80 level. This indicates the stock is likely to face stiff resistance at this level by Friday. The $72 level is likely to act as strong support for the stock this week as is reflected in the open interest build-up in out-of-the-money Put options.
It is noteworthy that open interest levels only provide a fair indication of support and resistance levels. Any major news or macro event may likely cause significant movement in stock prices that may lead to a change in the open interest levels.
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