By Laura Matthews and Saqib Iqbal Ahmed
NEW YORK, Feb 25 (Reuters) – Traders in the equity options market are unusually subdued about how much Nvidia’s quarterly results might move the stock, even as investors hope the chipmaker’s earnings report will shed light on the outlook for the artificial-intelligence trade.
Nvidia options imply a move of about 5.6% in either direction on Thursday, a day after the company reports results. This is the lowest expected post-results swing ahead of any Nvidia report in at least three years, according to data from analytics firm Option Research & Technology Services (ORATS).
While that would translate into a swing of roughly $260 billion in market capitalization – more than the individual market value of about 90% of S&P 500 constituents – in percentage terms, it is well below the 7.6% average implied move over the past 12 quarters, according to ORATS data.
The options-implied move also trails Nvidia shares’ average post-earnings move of 7.4% over the past three years.
“In a market where single-stock volatility is elevated relative to index volatility, this unusually low event pricing makes Nvidia one of the more interesting catalysts of the week,” said Chris Murphy, co-head of derivatives strategy at Susquehanna, a market maker in the NVDA securities.
While the S&P 500 has traded in a relatively tight range this year — never more than 2% above or below its prior year-end close — outsized fluctuations in individual stocks have occurred as investors dumped software shares on fears the artificial-intelligence boom could reshape markets in unexpected ways.
The muted expectation for a post-earnings move in Nvidia shares may have to do with the stock failing to log big swings in recent quarters, analysts said. The stock swung more than 5% in only one of the last five quarters, ORATS data showed.
“Nvidia simply has not been moving the way it used to on earnings,” Susquehanna’s Murphy said.
“With 80+ analysts covering the name and every major fund heavily focused on AI capex trends, positioning and estimates are far more refined than they were during the explosive 2023 phase, when earnings reactions of +14% and +24% were common,” he said.
“The element of surprise has diminished,” said Murphy.
This earnings season, options traders have generally made money by betting that stocks will move more than expected after companies report results.
Even with Nvidia’s weighting of roughly 8% in the S&P 500 and its leading role in AI – making its results crucial for the broader market – traders expect only a modest near-term move in the stock.
“It does feel like regardless of how good the report is and their guidance, that probably has already been baked in and we will get a muted reaction as we have for most of earnings season where option sellers most likely win and collect premium from speculators of a very outsized move,” Ken Mahoney, CEO of Mahoney Asset Management, said in a note.
Nvidia shares, up about 3% for the year, have retreated about 8% since hitting a record closing high in late October.
(Reporting by Laura Matthews and Saqib Iqbal Ahmed in New York; Editing by Matthew Lewis)
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