Nvidia: Nvidia’s options primed for $300 billion price swing after earnings

Nvidia options implied an 8.5% swing for the shares in either direction following the results, which will be reported after markets close, according to data from options analytics service ORATS. That is in line with previous percentage moves following results over the last 12 quarters. But with the AI-chipmaker’s market cap having grown to $3.44 trillion, the expected swing in market value is close to the biggest ever, at about $292 billion.

A move of that size would dwarf the market cap of about 95% of S&P 500 constituents.

Post-earnings moves in Nvidia’s shares have typically undershot market expectations. Larger-than-expected moves, however, have tended to be to the upside, said ORATS founder Matt Amberson. Of the last 12 quarterly earnings reports, five post-earnings moves have been outside what has been expected by the market. Of those, all have seen the stock price go higher, Amberson said.

Christopher Jacobson, a strategist at Susquehanna Financial Group, wrote on Monday that traders are assigning a slightly higher probability to an outsized move to the upside than to the downside. Results for the chipmaker – which is at the heart of the generative artificial intelligence boom – could be a key factor in determining the market’s trajectory. Investors are turning their focus to Nvidia following a post-US election rally that has stalled in recent days.

The S&P 500 is up 23% year-to-date despite a decline last week.

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“The market will extrapolate whatever Nvidia says to the entire AI trade,” said Nancy Tengler, chief executive officer and chief investment officer at Laffer Tengler Investments, in a note. Nvidia has bested lofty Wall Street revenue expectations for the past eight quarters. But with analysts expecting a slower pace of growth, how the company overcomes delays and supply-chain issues is likely to be an important factor for its stock price. The chipmaker is expected to report third-quarter sales surging 82.8% to $33.13 billion, according to data compiled by LSEG.

On Monday, Nvidia shares finished down 1.3% to $140.15. For the year, the stock is up about 180%, making it one of the top performers in the S&P 500 index.