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Traders of Nvidia Options Prepare for Possible Market Volatility Before the Earnings Report

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Nvidia options traders are getting ready for what could be a big shift in the dynamics of the market around the world’s top artificial intelligence chip manufacturer as results get near.

once spiking by almost 50% so far this year, Nvidia’s share price might see a significant swing. Options analytics tool ORATS predicts an 11% shift in either way once the company releases its quarterly results on February 21. According to ORATS founder Matt Amberson, this forecast volatility is the biggest expected change that traders have factored in ahead of Nvidia’s earnings in the last three years, well above the stock’s historical average earnings movement of 6.7% over that time.

In the event that Nvidia undergoes such a substantial volatility, this might result in an extraordinary change in market value, possibly reaching $200 billion. This amount is greater than the market capitalization of well-known chipmaker Intel Corp. and more than the total market values of almost 90% of the S&P 500 index firms.

More than 750,000 Nvidia options contracts had changed hands by 1 p.m. (1800 GMT) on Thursday, making it the second most frequently traded single stock name in the options market.

Bullish options are still in high demand even after Nvidia’s stock price saw a significant increase. Susquehanna’s analysis indicates that the stock’s 90-day 25 delta call skew, a sentiment indicator, is very close to a five-year high.

Susquehanna Financial Group strategist Christopher Jacobson offered the following analysis of this trend: “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.”

Nvidia overtook Alphabet, the parent company of Google, on Wednesday to take the third spot in terms of market value among American companies.

Based on LSEG data, the mean estimate from 33 analysts is that Nvidia will announce earnings of $4.56 per share, along with a spike in quarterly revenue to $20.378 billion from $6.05 billion a year earlier.

Options traders are preparing for what may be a seismic move in the share price of Nvidia as the company’s earnings announcement approaches, fueled by heightened expectations and market speculation.

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