NVIDIA Will Keep Crashing Until This Happens

As I'm writing this, NVIDIA Corp. (NVDA) stock is down more than 8% for the day, trading at about $109 and change.

The thing is, I'm not seeing a lot of put buying. In other words, this drop isn't caused by bearish traders betting on NVIDIA tanking.

Rather, what we’re seeing here is bullish traders selling their calls and cashing in on the stock’s meteoric rise this year.

Here’s when that might end – and why the selloff may keep going…

My approach to trading is focused on PFP: Price Action, Flows, and Position. Right now, the flows in NVIDIA are showing heavy call dumping, as I mentioned. Looking at the large options positions, meanwhile, shows that $110 is a big bearish strike.

If the share price falls below that and stays that way for a bit, that’s a very negative sign for the stock. As I’m writing this, that’s exactly what happened – and it spurred even more negative price action. $105 and $100 are the next targets.

However, there’s very few options being held under $100, so any drop below $110 in the short term will be oversold and likely bounce back.

Unless something makes the bears pile in and start buying puts at $100 or less, I don’t see this drop in NVIDIA shares continuing for long.

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