Nvidia Earnings Report Expected to Trigger Historic $300 Billion Swing

Traders in the U.S. equity options market are bracing for a major move in Nvidia’s stock following the company’s upcoming earnings report. The expected swing in market value is over $300 billion.

Data from analytics firm ORATS indicates that options pricing suggests a potential 9.8% move in Nvidia’s shares on Thursday, the day after it reports earnings.

This is a larger anticipated move than ahead of any Nvidia report in the last three years and significantly higher than the stock’s average post-earnings movement of 8.1% over the same period.

Unprecedented Market Impact:

With Nvidia’s current market capitalization at approximately $3.11 trillion, a 9.8% fluctuation could result in a market value change of about $305 billion. Analysts believe this could be the largest expected earnings move for any company in history.

According to LSEG data, such a move would exceed the market capitalization of 95% of S&P 500 companies, including well-known names like Netflix and Merck.

Broader Market Implications:

Nvidia’s earnings report is significant not only for the company itself but also for the broader market. The company’s stock has surged by around 150% year-to-date, contributing roughly a quarter of the S&P 500’s 18% gain over the same period.

“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.”

Trader Sentiment: FOMO Over Downside Risk:

Options data suggests that traders are more focused on Nvidia’s stock’s potential upside than on the risk of a significant decline.

According to Susquehanna Financial’s analysis, traders assign a 7% probability that Nvidia’s stock will rise more than 20% by Friday, compared to just a 4% chance of a more than 20% sell-off.

Steve Sosnick highlighted that instead of the usual protective hedges, much of the trading activity is driven by FOMO, or “fear of missing out,” on a potential rally. “They don’t want to miss a rally,” he said.

Historical Volatility and AI Optimism:

Nvidia’s shares have been notably volatile this year, with its average 30-day historical volatility being about twice that of other companies with market caps exceeding $1 trillion, according to a Reuters analysis of Trade Alert data.

Christopher Jacobson, a strategist at Susquehanna Financial Group, attributes the high options pricing to the stock’s historical movement and the market’s continued uncertainty and optimism surrounding AI.

“The options reflect how the stock is actually moving,” he explained. “It’s just a function of continued uncertainty/optimism regarding AI and the ultimate size of the opportunity coupled with NVDA having become such a widely followed stock among institutional and retail investors.”