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Nvidia Options Traders Prepare For A Massive Share Surge As Earnings Day Approaches

Nvidia Options Traders Prepare For A Massive Share Surge As Earnings Day Approaches
Investors in the U.S. equity options market are placing bets that a significant move in the shares of the leading artificial intelligence chipmaker in the world may result from Nvidia's impending earnings announcement.

According to statistics from options analytics tool ORATS, Nvidia, which has increased its share price by around 50% this year, might see a share price movement of roughly 11% in either way after its quarterly reports on February 21. According to Matt Amberson, the inventor of ORATS, that is the biggest predicted move that options traders have priced in ahead of Nvidia's earnings over the last three years and significantly higher than the stock's actual average earnings move of 6.7% over that time.

Given Nvidia's $1.8 trillion market capitalization, such a change might result in a $200 billion
That would represent more than 90% of the S&P 500 members' individual market values as well as the market capitalization of chipmaker Intel Corp.

As of 1 p.m. (1800 GMT) on Thursday, Nvidia options had exchanged hands over 750,000 times, making it the second most actively traded single stock name worldwide.

A Susquehanna research shows that despite the significant rally in the market, there was still a desire for upside options bets on Nvidia, with one sentiment indicator—the stock's 90-day 25 delta call skew—being close to a five-year high.
"The elevated call skew tells us that investors still see the potential for significant upside despite the move already made and that there is significant demand for upside exposure as some who may be fearful of the high volatility turn to upside calls for lower-risk exposure," Christopher Jacobson, a strategist at Susquehanna Financial Group, said.
The parent company of Google, Alphabet (GOOGL.O), lost ground to Nvidia on Wednesday to become the third most valued US firm.

The consensus expectation from 33 analysts, based on LSEG data, is that Nvidia will report earnings of $4.56 per share and an increase in quarterly revenue to $20.378 billion from $6.05 billion a year earlier.

Christopher J. Mitchell

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