With put selling having spiked on the equity in recent sessions, it seems that traders are either hoping to profit from a neutral-to-bullish outlook, or looking to get “paid to wait” for a favorable entry point.

Put options have been the popular choice for Nvidia Corporation (NVDA) in recent weeks, but traders aren't necessarily betting bearishly on the graphics processing unit (GPU) guru. Instead, NVDA has been heavily targeted by put sellers, according to data from the major options exchanges.

During the past ten sessions, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX) have sold to open 24,380 puts on NVDA.

By contrast, options players have bought to open 14,228 puts during this time frame. In other words, 1.71 puts have been sold for every one purchased put option.

By selling to open puts on NVDA, traders are likely trying to capitalize on a neutral-to-bullish forecast for the stock.

In a straightforward put-selling scenario, the trader receives an initial credit up front for writing the option. This represents the maximum potential profit on the play, which the speculator may retain in whole if the stock settles at or above the strike price of the sold option upon expiration. In this scenario, the put may be left to expire worthless.

Alternatively, put sellers could be looking to acquire NVDA shares on a dip. By writing puts at a strike price at which you'd like to purchase the underlying equity, you can essentially get "paid to wait" for a pullback to a favorable entry point. In this strategy, the initial credit received for selling the option helps to offset your cost of entry on the long stock position.

Taking a closer look at NVDA's near-term open interest, put sellers have been quite active at 17-strike options. The stock's soon-to-expire May 17 strike carries peak put open interest of 15,183 contracts, and data from the ISE, CBOE, and PHLX suggests that about 87% of this open interest was seller-initiated. Likewise, the equity's June 17 strike is home to 20,532 put contracts, about 80% of which were sold to open.

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Based on this configuration, it seems most likely that traders are trying to capitalize on solid chart support for NVDA. It's been a volatile year for the shares, which have bounced from a low of $15.42 to a high of $26.17 in 2011. Throughout all of the equity's ups and downs, the $17 region has proven itself to be a reliable technical floor. This area marked the site of a bullish gap back in early January, and the $17 region has supported all of NVDA's pullbacks in the intervening months.

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In fact, the preponderance of put open interest at the 17 strike in the May and June options series could provide a layer of options-related support, potentially helping to reinforce this technical backstop.

That being said, it's not necessarily the most lucrative time to sell premium on NVDA. The equity's Schaeffer's Volatility Index (SVI) stands at 47%, having dropped significantly in the wake of last week's earnings event. The current SVI ranks below 66% of comparable volatility readings taken during the previous year, indicating that NVDA's short-term options are relatively inexpensive at the moment.

By Elizabeth Harrow, contributor, Schaeffer’s Trading Floor Blog