S&P 500 closed Friday at 5,728. VIX at 17.8. Ten-year yield at 4.43%. Gold at $3,479. DXY at 99.8.
The S&P basically went nowhere for the week. The underlying action was considerably less boring than that number suggests.
Nvidia: $44 Billion and a Room Full of Skeptics
Nvidia reported Wednesday after the close. Revenue: $44.1 billion for fiscal Q1, against the $43.5 billion consensus estimate. Year-over-year growth: +69%. Data center revenue: $39.1 billion, up 73% YoY. Gross margin: 78.4%, which is remarkable for a hardware company.
The Blackwell GPU demand narrative held up completely. Management guided Q2 revenue at $45 billion, slightly above the $44.7 billion consensus. The AI infrastructure buildout is not slowing. The hyperscalers — Microsoft, Google, Amazon, Meta — are all accelerating their capital expenditure, and every dollar of incremental GPU spend flows disproportionately to Nvidia at these market-share levels.
The stock gapped up about 5% in after-hours Wednesday, then spent most of Thursday giving back half that gain, and finished the week up roughly 3.1% from last Friday's close. Classic "buy the rumor, sell the news" dynamics, amplified by the options setup I'll describe in a moment.
My read on Nvidia at these levels: the fundamental story is intact, but the valuation leaves no room for disappointment. At roughly 35x forward earnings on ~$9 earnings-per-share for fiscal year 2027, you are paying a premium for a business that has earned that premium. The question is whether the next several quarters can sustain 60-70% revenue growth or whether the law of large numbers eventually catches up. I think the deceleration is coming — the question is when, not if.
My Covered Call Expired Worthless
A personal note: I had a covered call on NVDA that expired on Friday. Strike was $1,050, purchased roughly six weeks ago when the stock was trading around $980. It expired worthless — NVDA closed Friday at $1,031, well below the strike. I keep the full premium.
This is exactly how covered calls are supposed to work. I did not cap my upside significantly — the stock did not blow past $1,050 — and I collected the premium to effectively lower my cost basis on the position. Total premium collected: approximately $14 per share. On 200 shares, that is $2,800 in income over six weeks against a position I was holding anyway.
The next question is whether to write another call. With earnings now behind us, implied volatility on NVDA will compress. The premium available for out-of-the-money calls is lower than it was pre-earnings. I will likely wait two to three weeks for IV to partially rebuild before writing the next one.
Options Expiration: The Noise Machine
Friday was a monthly options expiration — specifically, the third Friday of May, which triggers the largest quarterly settlement of equity index and ETF options. The intraday action was... instructive.
SPX opened up 0.6%, went to +1.1% by 10:30am, fell to -0.8% by 1:15pm, then rallied back to close essentially flat at +0.1%. A 1.9% intraday range on a day when nothing fundamental happened. Pure options-market mechanics — delta hedging, gamma exposure rolling off, dealers adjusting hedges as strikes were hit and breached.
This is why I stopped making directional calls on OPEX Fridays years ago. The price action is not informative about underlying supply and demand. It is informative about where the options open interest is clustered. I used this opportunity to do nothing — which is the right move.
The key thing to understand about OPEX: once the contracts settle, the dealer hedging pressure disappears. Monday after OPEX tends to be a cleaner read on actual positioning. Watch Monday May 25 for a better signal of where the market wants to go heading into week 22.
Dollar Short-Covering: The Move Has Paused
DXY closed at 99.8 on Friday, up from 98.9 last week. Three weeks of dollar weakness has paused — not reversed, paused. The move was driven by short-covering. When positioning is extremely stretched in one direction (short dollar, which it was), any data that disrupts the narrative triggers a squeeze. The catalyst this week was slightly hotter-than-expected PPI data on Thursday, which briefly brought the "higher for longer" narrative back into focus.
I do not think the dollar trend has reversed. The structural drivers — relative rate expectations, current account dynamics, de-dollarization flows — have not changed. But 99.8 versus 99.2 is a real move, and it put a modest headwind on gold, which slipped from $3,498 to $3,479 despite the otherwise supportive rates environment.
My EM equity positions experienced some near-term pressure from the dollar bounce. I'm holding. This looks like a correction within a downtrend, not a reversal.
What I'm Watching Next Week
FOMC minutes Wednesday, May 27 (delayed by Memorial Day). The minutes from the May 7 meeting will be the primary macro event of the week. I'm specifically looking for the internal debate around the inflation trajectory — how much disagreement is there between members on the timing of the first cut? Any hawkish dissent in the minutes could temporarily push yields back toward 4.50% and give the dollar another leg up.
Nvidia follow-through. After a +3.1% earnings week with significant intraday volatility, the question is whether institutional buyers step in on any weakness or whether profit-taking accelerates. I'm watching the $1,000 level as near-term support. A clean hold there is constructive.
Housing data — Case-Shiller and new home sales. The housing market is the one area where the rate-sensitive case for cuts is most directly testable. Two consecutive months of CPI softness, combined with 4.40% ten-year yields, should be starting to show up in mortgage application volumes. The data next week will tell us whether the housing market is responding to the rates move or whether it is still frozen.
Nvidia done. OPEX done. Dollar bounced but not broken. The equity market absorbed a week full of noise and ended exactly where it started — which in the current environment counts as a quiet win.
— R.A.