AI Stock Frenzy Fuels Options Surge for Arm Holdings
On Monday, ARM Holdings witnessed a surge in options trading, fueled by the fervor surrounding artificial intelligence (AI) stocks. Investors strategically positioned themselves for ongoing gains as the company’s shares skyrocketed by nearly 80% within a week. This notable upswing was propelled by a bullish quarterly forecast and increased demand for technology in designing chips for AI features.
Arm Holdings witnessed an extraordinary increase in options trading, reaching around 490,000 contracts per day over the past three sessions. This surge, exceeding the average daily trading volume in the month preceding the earnings report by more than tenfold, underscores the intensified interest in Arm Holdings among options traders.
Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, suggests that the booming options activity reflects investors actively searching for the ‘next NVIDIA.’ This surge in bullish options activity likely contributes to the ongoing boost in stock value.
NVIDIA, a chip industry heavyweight at the center of the AI frenzy, has experienced a remarkable 220% surge in the past year, securing its position as the best-performing S&P 500 stock during that period.
By 2:15 p.m. (1915 GMT) on Monday, 600,000 Arm contracts had changed hands, with the day’s volume projected to reach a record 816,000 contracts. Notably, call options predicting shares to rise above $185 by Friday were the most actively traded contracts, indicating investors’ optimism.
The notable rise in Arm’s share price translated into substantial gains for bullish options bets. For instance, a trader who invested approximately $12.2 million in 5,000 ARM January 2026 calls on February 7 saw the value of these contracts soar to approximately $42 million by Monday. Despite these gains, the trader appears to be holding onto these call options, signaling a bullish stance on the stock.
Arm puts were also active on Monday, potentially suggesting that some investors are looking to secure recent gains in the stock by exercising their right to sell shares at predetermined prices.
While Arm’s technology is not directly utilized in AI work, companies like NVIDIA are choosing it for central processing units that complement their AI-specific chips. This strategic decision further adds to the appeal in the dynamic landscape of AI-focused investments.
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