Nvidia set for $260 billion price swing after earnings, options indicate

Options traders are pricing in about a $260 billion swing in Nvidia’s (NVDA.O), opens new tab market value following the chipmaker’s second-quarter earnings expected on Wednesday, US options market data showed.

Nvidia options implied a roughly 6% swing for the shares in either direction following the results, which will be reported after markets close on Wednesday, according to the data.

That is below the 7% long-term average move, suggesting that investors may now have a better handle on what to expect as the company matures.

“The ripples out of Nvidia might be more interesting than the actual move for Nvidia,” said Chris Murphy, co-head of derivatives strategy at Susquehanna, a market maker. “A lot of these really high-flyer, speculative AI names have come off a lot, but Nvidia is basically back right below its all-time high.”

Should the chipmaker’s results exceed expectations, Murphy said that would “support some of the harder hit, more speculative areas of the AI trade.”

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Over the last 12 quarters, Nvidia’s implied earnings move averaged 7.7%, while the average actual move was closer to 7.6%, according to data from ORATS.
After a huge rally that helped lift markets this year, the technology sector pulled back a bit this month on fading enthusiasm for those stocks.

Traders are now eying Nvidia earnings to see if its $4 trillion market valuation is justified. Additionally, the potential impact on its forecasts from a recent revenue-sharing deal with the U.S. government will be closely watched.

Shares of Nvidia, the semiconductor giant at the heart of the AI trade, have gained about 34% this year, and closed up 1.02% on Monday at $179.81. The S&P 500 (.SPX), opens new tab fell 0.43% to 6,439.32 on the day and was up 9.5% year-to-date.

“It’s been (on) an amazing run,” said Matt Amberson, founder of ORATS. “It’s just a Goldilocks time for Nvidia.”