Nvidia’s options are poised for a nearly $300 billion shift in the chipmaker’s market value following the company’s quarterly earnings report on Wednesday, according to U.S. options market data. The options suggest an 8.5% price move in either direction after the results, which will be released after market close, based on data from options analytics firm ORATS. This is in line with the average percentage changes seen after earnings reports over the past 12 quarters. However, the expected scale of this week’s move is particularly notable, especially as Nvidia now holds the title of the world’s most valuable tech company and serves as a key indicator of the artificial intelligence boom.
The market’s expectations underscore the high stakes for Nvidia’s report, which will send shockwaves through the global tech sector. The company is widely considered the gold standard in artificial intelligence chips, and its results are seen as a bellwether for the industry. In the past, blowout quarterly earnings reports from Nvidia have lifted the stock market as a whole.
In the immediate aftermath of Nvidia’s two most recent earnings reports, the stock soared more than 15%, sending the broader markets higher. The company’s results are being closely watched to see whether its latest blowout can reignite the market rally that has lifted stocks to a series of records this year.
Nvidia’s options suggest traders expect a move of around 9.8% in the share price following its results, due Thursday. That is larger than the company’s average post-earnings move in the past three years and also far above its long-term average of 8.1%.
However, the options market’s pricing also suggests investors are more worried about missing out on a significant Nvidia upside move than getting hurt by a big sell-off. According to analysis from Susquehanna Financial, options pricing indicates a 7% chance that the stock will rise more than 20% by Friday, while only a 4% probability of a more significant sell-off.
The options market also reflects a volatile environment ahead of Nvidia’s earnings, with short-term options showing much higher implied volatility than long-term ones. That creates a unique trading opportunity that can be exploited using an option spread strategy. To do so, traders must sell an Aug. 30 put at a strike price of 101 and buy a Sept. 13 put at a strike price of 96. This advanced options strategy involves selling one contract at a lower strike price and buying another at a higher strike price to profit from the difference in volatility skew. For more on this strategy, click here for a video and guide. Also, check out the Nvidia option chain and other options trading resources.
