It’s been a while Nvidia This profit shocked the world, or maybe just traders.
According to Cboe LiveVol data, option pricing has overestimated the size of NVIDIA’s post-report swings six of the past seven quarters and 14 of the past 20 quarters. The implied volatility reflected in returns averages 6.7%, while the actual average response rate is 4.6%.
Perhaps traders are wiser this time. The world’s largest company’s implied volatility hit its highest since March on Friday and fell amid a slide in stock prices this week, with current expectations downgraded to a 5.9% move.
This will likely be a more pressured earnings for Jensen Huang’s AI giant, after its stock price has fallen 34% since its March lows, adding an additional $1 trillion to its market capitalization. Adding further drama to recent events, the stock has fallen since the last three reports, including a 5.5% plunge in February.
“For the stock to skyrocket, it would have to completely blow the doors off, like 50% above guidance,” Scott Bauer, CEO of Prosper Trading Academy, said by phone. “Given the incredible history of the index and the stocks that pop up and sell quickly, we want to sell the premium and go short a little bit.”
Nvidia since the beginning of the year
Regardless of the direction, just getting past Nvidia’s earnings could pave the way for the next big market move. vicks SpotGamma’s Brent Kochuba points out that futures prices will likely rise through Thursday due to Nvidia’s earnings.
“We continue to believe that the post-OPEX market correction makes sense, and the main event is tomorrow night’s NVDA results,” Kočuba wrote to clients on Tuesday.
