Recently, while looking at the NVDA options market, I spotted a very 'clever' three-legged combination.

Originally, I wanted to write something optimistic about $NVIDIA(NVDA.US) this week—up 18% in 10 days, back to $200, Jensen Huang at GTC pulling the order backlog from $500B to $1 trillion, the Vera Rubin chip cutting inference token costs by another 10x. By all accounts, it looks poised to hit new highs.

But then yesterday, while looking at options data, I saw a combination trade that made me stop and think for a long time.

Three legs, total notional size $5.78M, bearish-leaning, but hedged:

The first leg is the main position—a DTE 29-day, near-the-money Buy Put, single leg $4.46M. This is the skeleton of the entire position, with 76% of the money bet here.

The second leg is a DTE 15-day, near-term Sell Put, small amount. This is a classic "near-term income collection, long-term heavy bet" structure—using the accelerated time decay of the near-month to offset the cost of the far-month Put.

The third leg is even more interesting—a DTE 176-day, far out-of-the-money Buy Call, treated like a lottery ticket.

I stared at these three legs for a while. Translating this person's thinking: they are bearish, but only bearish for the next 4–5 weeks (i.e., this event window before late May); they don't want to bet all their money on the bearish view, so they hedge part of the time value with a near-term Sell Put; they also keep a long-dated OTM Call lottery ticket for October, meaning "I'm afraid of trouble in the short term, but I'm not getting off the ride in the long term."

This structure has a specific term: "bearish-leaning with hedging." It usually appears in two scenarios—risk position adjustment before earnings, or hedging against macro/geopolitical events (tariffs, export controls, AI capex slowdown). NVDA's next earnings report isn't until late May, which aligns perfectly with the 29-day DTE.

I'm watching two key levels—$212 is the previous high from October 2025 and the ceiling for the main defensive line; $200 is the current psychological barrier and near-the-money level. A break below this enters the profit zone for the main Put position. The overall OI Put/Call ratio of 0.84 is still bullish-leaning, so this combination trade is a minority "betting against the crowd" position. Trades like this usually come from institutions with an information edge.

I'm not following—the execution cost of chasing this three-legged big player trade is too high for me, and I don't have their information. But this trade made me change my NVDA position from "all-in on shares" to "shares + a mid-May $195 Put for hedging." Looking on the bright side, if this hedge isn't used, it's the "sleep-well-at-night money" I should pay. It's also possible that this is just an institution hedging a large Call position, unrelated to directional judgment. But even so, the appearance of such a "big money betting on short-term downside while retaining long-term upside" combination in the market is itself a signal: don't go naked long in the short term.