Nvidia results could spur $300bn record swing in shares, Reuters options show

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – Traders in the U.S. stock options market expect Nvidia’s (NASDAQ: ) upcoming earnings report to cause a more than $300 billion swing in shares of the most dominant maker of artificial intelligence chips from the world.

Options pricing shows traders are anticipating a roughly 9.8 percent move in the company’s shares on Thursday, a day after it reports earnings, data from analyst firm ORATS showed. That’s more than the expected move ahead of any Nvidia report in the past three years, and well above the stock’s average move after earnings of 8.1 percent over the same period, according to ORATS.

Given Nvidia’s market cap of about $3.11 trillion, a 9.8% swing in the stock would translate to about $305 billion, possibly the largest expected earnings move of any company in history, analysts said.

Such a move would reduce the market capitalization of 95 percent of constituents, including Netflix (NASDAQ: ) and Merck, according to LSEG data.

The results from Nvidia, whose chips are widely regarded as the gold standard in artificial intelligence, also have big implications for the wider market. The stock is up about 150% year to date, accounting for about a quarter of the S&P 500’s 18% year-to-date gain.

“That alone has been a huge contributor to the overall profitability of the S&P 500,” said Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ: ). “It’s Atlas (NYSE: ) that keeps the market going.”

Options pricing suggests that traders are more concerned about missing out on a major move from Nvidia than being hurt by a big drop.

Traders are giving the stock a 7 percent chance of rising more than 20 percent by Friday, while just a 4 percent chance of a more than 20 percent selloff, according to a Susquehanna Financial analysis of options data.

“(Before earnings) people usually want to buy hedges, they want to buy insurance, but with Nvidia, a lot of that insurance is FOMO insurance,” Sosnick said, referring to the popular acronym for “fear of lose out”.

“They don’t want to miss a rally.”

Part of the reason options traders are pricing Nvidia so high has to do with how volatile the company’s stock has been in the past.

Nvidia’s average 30-day historical volatility this year — a measure of how much the stock has fluctuated over a continuous 30-day period — is about twice the average of the same measure for all other large-cap companies market cap of more than $1 trillion, according to the data. a Reuters analysis of Trade Alert data.

“Options only reflect how the stock is actually moving,” said Christopher Jacobson, a strategist at Susquehanna Financial Group, which makes markets for Nvidia’s securities.

“(It’s) just a function of continued uncertainty/optimism around AI and the ultimate size of the opportunity, along with the fact that NVDA has become such a watched stock among institutions and retail,” he said.