Nvidia's upcoming earnings report is anticipated to cause a significant market shift, with traders in the U.S. equity options market expecting a potential $300 billion swing in the company's stock. The pricing of options suggests traders foresee a 9.8% movement in Nvidia’s shares following the earnings announcement, according to data from analytics firm ORATS. This projected shift is notable, as it would surpass any previous expectations for Nvidia over the last three years and is much higher than the stock's average post-earnings move of 8.1% during that period.
With Nvidia's current market capitalization around $3.11 trillion, a 9.8% change could equate to a $305 billion fluctuation, which analysts believe might be the largest expected earnings-driven move for any company in history. This potential swing dwarfs the market capitalizations of most S&P 500 companies, including giants like Netflix and Merck, according to data from LSEG.
Nvidia’s performance has broader implications for the market at large, especially given that the stock has surged about 150% year-to-date, contributing to roughly a quarter of the S&P 500's 18% year-to-date gain. "It alone has been a huge contributor to the overall profitability of the S&P 500," noted Steve Sosnick, chief strategist at Interactive Brokers. "It's the Atlas holding up the market."
Interestingly, options pricing reveals that traders are more focused on not missing out on a potential upside than on protecting against a downside risk. A Susquehanna Financial analysis of options data indicates a 7% chance that Nvidia’s stock could rise more than 20% by Friday, compared to just a 4% chance of a similar decline.
This heightened activity around Nvidia is partly driven by the stock's historical volatility. Nvidia's 30-day historical volatility this year is nearly double that of other companies with market caps exceeding $1 trillion, according to Reuters' analysis of Trade Alert data. "The options are just reflecting how the stock is actually moving," said Christopher Jacobson, a strategist at Susquehanna Financial Group. He added that this volatility is linked to the ongoing uncertainty and optimism surrounding AI and Nvidia's significant role in that space.
Nvidia’s chips are considered the gold standard in artificial intelligence, and the upcoming earnings report could further solidify its position in the market, making it a key player to watch for investors and traders alike.
(Source:www.businesstimes.com.sg)
With Nvidia's current market capitalization around $3.11 trillion, a 9.8% change could equate to a $305 billion fluctuation, which analysts believe might be the largest expected earnings-driven move for any company in history. This potential swing dwarfs the market capitalizations of most S&P 500 companies, including giants like Netflix and Merck, according to data from LSEG.
Nvidia’s performance has broader implications for the market at large, especially given that the stock has surged about 150% year-to-date, contributing to roughly a quarter of the S&P 500's 18% year-to-date gain. "It alone has been a huge contributor to the overall profitability of the S&P 500," noted Steve Sosnick, chief strategist at Interactive Brokers. "It's the Atlas holding up the market."
Interestingly, options pricing reveals that traders are more focused on not missing out on a potential upside than on protecting against a downside risk. A Susquehanna Financial analysis of options data indicates a 7% chance that Nvidia’s stock could rise more than 20% by Friday, compared to just a 4% chance of a similar decline.
This heightened activity around Nvidia is partly driven by the stock's historical volatility. Nvidia's 30-day historical volatility this year is nearly double that of other companies with market caps exceeding $1 trillion, according to Reuters' analysis of Trade Alert data. "The options are just reflecting how the stock is actually moving," said Christopher Jacobson, a strategist at Susquehanna Financial Group. He added that this volatility is linked to the ongoing uncertainty and optimism surrounding AI and Nvidia's significant role in that space.
Nvidia’s chips are considered the gold standard in artificial intelligence, and the upcoming earnings report could further solidify its position in the market, making it a key player to watch for investors and traders alike.
(Source:www.businesstimes.com.sg)
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