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The recent surge in demand for artificial intelligence (AI) stocks has led to a sharp increase in options trading on Arm Holdings. With the company's shares nearly doubling in price within a week, options traders are positioning themselves for further gains.
Arm Holdings Capitalizes on AI Chip Design Technology
Reuters reported that Arm Holdings' stock price has risen by 80% since its better-than-expected quarterly results were announced. The company's technology for designing chips tailored for AI applications has been in high demand, driving the impressive performance of its shares.
US News noted that the significant increase in Arm Holdings' options trading volume, reaching approximately 490,000 contracts per day in the last three sessions, suggests investors actively seek the "next NVIDIA." This surge in bullish options activity is likely contributing to the stock's upward momentum.
Nvidia, a prominent player in the AI industry, has seen its stock rise by approximately 220% over the past year, making it the top-performing S&P 500 stock during that period. The company's success has further fueled interest in AI-related investments.
By mid-afternoon on Monday, 600,000 Arm contracts had already been traded, with the day's volume projected to reach a record-breaking 816,000 contracts. The most actively traded Arm contracts were call options on shares rising above $185 by the end of the week.
Massive Gains from Bullish Options Bets
The Arm's share price surge has resulted in substantial profits for traders who made bullish options bets. For example, a trader who invested approximately $12.2 million in ARM January 2026 calls on February 7 saw the value of those contracts skyrocket to around $42 million by Monday.
Despite the significant gains, the trader appears to hold on to the call options, indicating a bullish sentiment towards the stock. Additionally, there has been notable activity in Arm puts, suggesting some investors may be looking to secure profits from the recent stock price increase.
While Arm's technology is not directly used in AI work, companies like Nvidia are choosing Arm's central processing units to complement their AI-specific chips. This strategic decision has further propelled Arm Holdings' success in the AI industry.
Photo: Arm Newsroom
