Nvidia Corp NVDA has been capturing headlines. However, the recent buzz isn’t about its actions, but rather its inaction. Once unstoppable, the tech giant is now experiencing a decline. Over the last five trading days, NVDA shares have shed approximately 2% in value.
The past month has been even less kind to NVDA stock, lagging behind by 8%. Experts attribute this downturn to a temporary lull in performance. While still a top pick for most of the 37 analysts tracking Nvidia, the company is showing signs of fatigue. Quarter-to-quarter revenue growth has tapered from 22% in Q4 of fiscal 2024 to 15% in Q2 of fiscal 2025.
Yet, amidst this slowdown, Nvidia’s collaboration with Alibaba Group Holding’s BABA cloud-computing division to enhance autonomous driving in China could be a silver lining. The global automotive AI market has swelled to a value of $2.99 billion in 2022, per Grand View Research.
Although NVDA stock may be waning, the options market seems prepared. With implied volatility currently at 44.56% versus a historical volatility of 59.03%, it’s clear that expectations have been adjusted. The subdued volatility creates an attractive environment for traders to dabble in NVDA options, potentially boosting demand for related products like leveraged ETFs.
The Direxion ETFs: Direxion, renowned for its leveraged ETFs, has garnered acclaim for providing amplified exposure to various assets using instruments like swaps and futures contracts.
The Direxion Daily NVDA Bull 2X Shares NVDU focuses on NVDA stock, aiming for 200% of its daily performance. On the flip side, the Direxion Daily NVDA Bear 1X Shares NVDD aims to provide 100% of the inverse performance of NVDA.
Investors contemplating these ETFs should heed a crucial warning: both funds are not intended for extended exposure beyond a day, risking volatility drag due to daily compounding.
The NVDU ETF: NVDU has impressively surged over 220% since the year began, attracting speculators with its outstanding performance.
- Despite being a popular leveraged fund, NVDU has slowed down its momentum, posting a still impressive gain of 21.5% in the last six months.
- The ETF currently hovers between its 50-day moving average above and the 200 DMA below, showcasing a potential bullish pennant pattern since April.
The NVDD ETF: In stark contrast to NVDU, the NVDD fund has struggled, plummeting by 66% since January.
- Although not as enticing, NVDD has shown signs of life lately, rising over 6% in the past month.
- However, the bears face a tough road ahead, as NVDD remains below both its 50 and 200 DMAs, with a recurrent bounce off the $7.50 support level.