Traders Bet on Massive Move in Nvidia's Shares Ahead of Earnings Report
Traders in the U.S. equity options market are speculating on a significant swing in the shares of Nvidia, the world's leading artificial intelligence chipmaker, ahead of its upcoming earnings report. Data from options analytics service ORATS suggests that Nvidia's shares could see a movement of approximately 11% in either direction following its quarterly results on February 21. This would be the largest expected move in the stock's earnings over the past three years, far exceeding the average earnings move of 6.7% during that period.
Surpassing Chipmaker Intel Corp's market capitalization of $1.8 trillion, a swing of this magnitude could result in a potential market value shift of about $200 billion for Nvidia. This change in market capitalization would also surpass that of approximately 90% of other constituents. The strong interest in Nvidia's stock is evident from the high trading volume of over 750,000 options by 1 p.m. on Thursday, making it the second most actively traded single stock name in the options market.
Despite the stock's significant appreciation this year, there is still a demand for upside options bets on Nvidia. Susquehanna analysis shows that the stock's 90-day 25 delta call skew, a measure of sentiment, is near a five-year high. This indicates that investors are still optimistic about the potential for further gains and are turning to upside calls for lower-risk exposure amidst the high volatility.
Furthermore, Nvidia recently overtook Google-parent Alphabet to become the third most valuable U.S. company. Analysts are expecting Nvidia to report earnings of $4.56 per share, with quarterly revenue estimated to rise to $20.378 billion compared to $6.05 billion a year ago, based on data from 33 analysts.
Analyst comment
Positive news: Traders are optimistic about Nvidia’s upcoming earnings report, with options pricing in the largest expected move in the last three years. Demand for upside options bets remains strong, indicating potential for significant upside. If Nvidia delivers strong earnings, the market value could swing by $200 billion, surpassing Intel’s market cap and most constituents.
Market analysis: The market expects a significant move in Nvidia’s shares after its earnings report. If the company meets or exceeds expectations, the positive sentiment and strong demand could drive the stock higher and increase the market value significantly.
