Traders Anticipate Major Move for Nvidia Shares Ahead of Earnings Report

Traders are bracing for significant movement in Nvidia's shares as the chipmaker prepares to release its earnings report on Wednesday. However, options market data suggests that expectations for volatility are more subdued compared to previous quarters.

Key Points:

1. Implied Volatility:

   • Nvidia (NASDAQ:NVDA) options are indicating an 8.7% swing in either direction by Friday, according to Trade Alert. This potential move translates to a market cap fluctuation of approximately $200 billion, which is larger than the market capitalization of about 90% of S&P 500 companies.
   • Despite being significant, this expected move is smaller than the 16.4% jump Nvidia's shares experienced following its last quarterly earnings report. It's also below the average 12% move traders have priced in over the past eight quarters.

2. Market Sentiment:

   • "Volatility and expectations had been a fair amount higher the last time around," noted Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.
   • Nvidia, which has surged about 87% this year, is considered a key indicator of the growing AI industry. With a market value of approximately $2.3 trillion, it ranks as the third-largest company on Wall Street, trailing only Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).

3. Broader AI Impact:

   • Investor interest in AI has expanded beyond Nvidia. Bank of America strategists, including Gonzalo Asis, mentioned that "AI benefits are broadening out to power, commodities, and utilities," indicating that the AI theme is impacting a wider range of sectors.

4. Market Outlook:

   • Wall Street remains optimistic about Nvidia's quarterly report, with many betting on strong results. Nvidia's performance is closely watched as it serves as a bellwether for the AI industry's progress and market potential.

Conclusion:

As Nvidia prepares to announce its earnings, traders and investors are closely monitoring the options market for cues on potential stock movement. While the anticipated volatility is notable, it is less pronounced compared to previous quarters, reflecting a possible recalibration of expectations. Nvidia's continued prominence in the AI sector underscores its critical role in shaping market dynamics and investor sentiment.

For real-time insights and data on social sentiment around Nvidia and other companies, check out the Trending Social Sentiment API by Financial Modeling Prep. This tool provides trending sentiment data, helping investors make informed decisions based on current market trends.