Shares of NVIDIA declined 3.68% in morning trading as investors moved to lock in gains after one of the stock’s most intense short-term rallies in recent memory. The drop followed a roughly 20% jump in the stock since May 5, a surge that accelerated after reports that Washington had cleared a limited set of Chinese buyers to acquire NVIDIA’s H200 AI processors.
With those developments largely absorbed by the market, some holders elected to reduce exposure rather than carry positions into a potentially volatile earnings print. NVIDIA is scheduled to release quarterly results on May 20, and that looming event created a focal point for traders weighing whether to extend risk.
Options dynamics amplified selling pressure. A large swath of bullish call positions had been pushed deep in the money during the recent rally, delivering elevated leverage into expiration day. The article’s data showed approximately $40 billion in options delta trading against only $4 billion in total premium - a concentration of directional exposure that can force rapid repositioning when sentiment shifts.
On the day of the pullback, the ten most active NVIDIA options by volume were set to expire, heightening the potential for short-term volatility. The 235-strike call alone accounted for roughly $114 million in premium and nearly $5 billion in delta. That imbalance created a natural incentive for traders to unwind positions instead of rolling exposure forward into the uncertainty surrounding next week’s quarterly report.
As one derivatives analyst summarized the situation, "How do you reprice China reopening to Nvidia, I think that’s what people are repositioning for right now," said Brent Kochuba, founder at SpotGamma. The comment captures how traders were recalibrating the stock’s risk-reward profile as fresh information was already priced in.
The broader market backdrop offered little relief. The NASDAQ Composite fell 1.40%, the S&P 500 dropped 0.99%, and the Dow Jones declined 0.83% during the session, producing a risk-off tone that magnified selling across multiple names - including those viewed as momentum or growth plays.
Even a constructive analyst action earlier in the week failed to fully offset the selling. Bank of America’s Vivek Arya raised his NVIDIA price target to $320 from $300 on May 13 while maintaining a Buy rating, but that bullish signal was not sufficient to counter the combined weight of profit-taking and expiry-driven flows on a day of wider market weakness.
Ultimately, the pullback reflects a convergence of forces: a stock that had climbed rapidly into a cluster of positive catalysts, pronounced options-market leverage coming into expiration, and a weak macro tape that amplified the move downward. NVIDIA’s results for Q1 FY2027 are due May 20, and market participants will be focused on whether management guidance can substantiate the stock’s elevated valuation near its 52-week high.
Until the earnings release, the near-term direction of the shares appears likely to be steered more by positioning and technical flows than by incremental fundamental news, given the extent to which prior positive developments have been priced in.