Insights 
VT 
China initiated an antitrust investigation into Nvidia in December 2024 due to alleged breaches of anti-monopoly law. This move is perceived as a response to US restrictions on chip technology. The country’s market regulator has confirmed that the investigation is ongoing.
Nvidia’s shares are down by approximately 2% in pre-market trading following the announcement.
We see this antitrust investigation as a direct catalyst for increased volatility in Nvidia’s stock over the coming weeks. Implied volatility for near-term options has already jumped, with the 30-day IV climbing above 55%, making both puts and calls more expensive. This environment suggests that strategies that benefit from price swings, rather than just direction, should be considered.
Given the uncertainty, we are looking at purchasing put options to hedge existing long positions or to speculate on further downside. China still accounts for a significant portion of revenue, historically around 15-20% despite the US curbs that intensified back in 2023. Any further disruption from this probe could materially impact future earnings guidance and investor sentiment.
For those who believe this is a short-term overreaction, selling out-of-the-money put credit spreads could be a viable strategy. This approach allows us to collect premium by taking advantage of the higher volatility while betting that the stock will not fall much further. After its strong run through late 2024 and early 2025, a small pullback like this may be seen by many as a buying opportunity.
We should remember that similar antitrust investigations into major tech firms often take years to resolve. This suggests that while the initial shock may fade, Nvidia stock could be weighed down by headline risk for months. This could lead to a period of range-bound trading rather than a sustained trend, making strategies like iron condors potentially profitable.
