Huge, Unusual Options Activity in Nokia After Nvidia Takes $1 Billion Stake

Core Insights - A significant volume of long-dated put options has been traded in Nokia Corp (NOK) ADRs following Nvidia's $1 billion investment in new NOK shares, aimed at AI-related projects [1][3] - The put options are set to expire in over 2 years and are out-of-the-money at a strike price of $7.00 per share, with trading volume exceeding 90 times the previous outstanding options [1][4] - NOK shares have increased by 34% recently, reaching $7.45, while Nvidia's stake in Nokia is now 2.9% after purchasing shares at $6.01 each [3] Options Activity - Over 27,000 NOK put contracts have been traded at the $7.00 strike price, with the last trade at $1.26, now trading at $1.31 [4][5] - The breakeven point for the investor who sold these puts is $5.74, which is 23% below the current share price, indicating a potential downside risk if NOK falls to $7.00 [6] - The yield for the investor selling these puts is 18.0% over the next 27 months, averaging about 0.67% per month [6][7] Investment Strategy - This strategy provides a lower buy-in price for long-term investors in NOK shares, allowing for potential profit if the stock does not fall to $7.00 [7] - Some investors may be using these put options to hedge their long-term investments in NOK, protecting against potential declines in share price [8]