Pelosi’s recent Nvidia call option purchase

According to recent disclosure forms, former House Speaker Nancy Pelosi and her husband Paul Pelosi purchased 50 call options on Nvidia stock last month. The call options have a strike price of $120 and an expiration date of December 20, 2024. The total value of the transaction was between $1 million to $5 million.

A call option gives the holder the right, but not obligation, to buy the underlying asset (in this case Nvidia stock) at a predetermined price (the strike price of $120) by a certain date (the expiration date of 12/20/2024). This allows Pelosi to profit if Nvidia stock rises above $120 per share by that expiration date.

Past investments and controversy over congressional stock trading

Paul Pelosi is a noted investor and the couple has a reported net worth of over $140 million. In the past, they have profited millions from call options on other big tech stocks like Google, Salesforce, Roblox and Disney.

However, Pelosi’s stock trading has also attracted controversy given her position in Congress. In 2021, she resisted calls to ban members of Congress from trading individual stocks, which some saw as a conflict of interest. Pelosi and her husband sold 25,000 Nvidia shares in mid-2021, netting $4.1 million, right before a key congressional vote on a semiconductor bill that would boost the industry, including Nvidia. Despite publicly supporting the bill, the sale proved financially mistaken as Nvidia shares have since surged over 200%. If held, the value of their stake would be over $12 million now.

Analysis of Pelosi’s latest Nvidia investment

Financial experts analyzed Pelosi’s recent call option purchase on Nvidia as bullish on the company’s performance in the coming year. By purchasing the calls rather than shares, Pelosi can profit from stock appreciation without fully investing $6 million to buy 50,000 shares at $120 each. If Nvidia rises above $120, she could exercise the options to purchase the stock at the lower strike price.

Her prior sales of Nvidia calls in 2022 for losses also raised scrutiny about potential insider knowledge from her congressional role right before key tech legislation. However, Pelosi’s return to investing in Nvidia signals confidence in the company’s long-term prospects in the growing semiconductor and AI industries. The total value of her recent transaction between $1-5 million also represents a sizeable renewal of her bets on Nvidia’s continued success.