(Bloomberg) — Nvidia Corp. investors may have almost $200 billion in market value riding on this week’s earnings report, according to options positioning.
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Prices for short-term calls and puts imply a 10.6% move in the chipmaker’s shares on Thursday, the session after its earnings report, according to data compiled by Bloomberg. That would sway Nvidia’s market capitalization by some $180 billion, one of the largest single-session moves on record, still trailing records set by Meta Platforms Inc. — holder of both the biggest one-day drop and largest single-session gain.
Traders are bracing for more volatility after the stock tripled in the past year — pumped by an unrelenting artificial intelligence frenzy that’s propelled broad markets. Nvidia is the S&P 500’s top performing stock year-to-date and the biggest tech firms have contributed some 30% of the index’s gains this year, so a big swing would likely ripple across the major benchmark. The chipmaker’s shares slid as much as 6.7% on Tuesday, dragging down megacap indexes with it.
“Big moves have left some concerned with valuations and fearful of adding to or establishing positions here, but at the same time they are fearful of missing out in the event of another leg higher,” said Christopher Jacobson of Susquehanna International Group. “So many are turning to upside calls as a limited-risk alternative.”
For months, market participants have been positioning for additional gains — paying a premium for calls over puts, as traders became more interested in betting on a further rally than protecting against a pullback.
Some of the options with biggest open interest are calls ranging from $1,010 to $1,380, some of which expire at the end of this week. Reaching that lofty level would require a surge of more than 39% from Friday’s close.
While the next-day moves after the last two earnings have been fairly muted, the stock moved 14% and 24% after February and May reports last year.
As of Friday’s close, options markets give Nvidia a one in four chance of moving outside of the $620 to $850 range, according to data compiled by Susquehanna — representing a 15% dip or a 17% advance.
–With assistance from Nour Al Ali, Daniel Curtis and Matt Turner.
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