Nvidia Options Traders Prepare for Potential Market Shake-Up Ahead of Earnings

Nvidia Stock

Traders in the U.S. equity options market are gearing up for what could be a seismic shift in Nvidia’s (NASDAQ:NVDA) stock following the upcoming earnings report from the leading artificial intelligence chipmaker.

With Nvidia’s stock up approximately 50% so far this year, options analytics service ORATS indicates that traders are anticipating a significant move of around 11% in either direction after the quarterly results on Feb. 21. According to ORATS founder Matt Amberson, this expected move is the largest that options traders have priced in ahead of Nvidia’s earnings in the last three years, far surpassing the stock’s average earnings move of 6.7% over that period.

Given Nvidia’s massive market capitalization of $1.8 trillion, such a move could potentially translate to a swing in market value of about $200 billion. This would surpass the market capitalization of chipmaker Intel Corp (NASDAQ:INTC) and exceed the market values of approximately 90% of S&P 500 constituents.

Trading activity surrounding Nvidia options has been robust, with more than 750,000 options changing hands by 1 p.m. (1800 GMT) on Thursday, making it the second most actively traded single stock in the options market.

Despite the significant rise in the stock price, demand for upside options bets on Nvidia remains strong. The stock’s 90-day 25 delta call skew, a measure of sentiment, is near a five-year high, according to analysis from Susquehanna. Christopher Jacobson, a strategist at Susquehanna Financial Group, noted that the elevated call skew indicates investors’ anticipation of significant upside potential, even amid concerns about high volatility.

On Wednesday, Nvidia surpassed Google-parent Alphabet (NASDAQ:GOOGL) to become the third most valuable U.S. company.

Analysts’ expectations for Nvidia’s earnings stand at $4.56 per share, with a projected rise in quarterly revenue to $20.378 billion from $6.05 billion a year ago, based on the mean estimate from 33 analysts, according to LSEG data.

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