NEW YORK, - Options traders cashed in parts of their bets against Nvidia and positioned for a longer-term share price recovery on Thursday, after CEO Jensen Huang announced he was stepping down.
Huang's departure has raised uncertainty over the future direction of the AI chipmaker he built into one of the world's most valuable companies. Chief Financial Officer Colette Kress will serve as interim CEO as the company searches for a permanent successor.
The leadership turmoil sent options volatility soaring on Thursday, but options trading suggested that investors were repositioning for a recovery rather than fleeing the stock.
"Nvida's competitive advantage and customers don't disappear overnight," said Seth Hickle, chief investment officer at Mindset Wealth Management. "The market is trying to determine whether this is a temporary leadership crisis or something that fundamentally changes the AI investment thesis."
Options give holders the right, but not the obligation, to buy or sell the underlying stock at a set price before a certain date. Call options typically gain value when the stock rises, while puts gain when it falls.