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NVIDIA Corporation (NVDA) Traders Bet On an Earnings Win

NVIDIA Corporation sees a rush of call buying ahead of tonight's earnings report

by 2/12/2014 2:46 PM
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Option Brief: NVIDIA Corporation (NASDAQ:NVDA) will take its turn in the earnings confessional after tonight's close, and ahead of the event, overall option volume has accelerated to more than three times the typical intraday rate. Calls are easily the options of choice, though, and are outpacing puts by a 2-to-1 margin. Based on the two most active strikes in today's session, a number of speculators are betting on NVDA to repeat its historical post-earnings price action.

Specifically, the weekly 2/14 16.50-strike and February 17 calls have seen 3,090 and 2,688 contracts change hands, respectively. The majority at each strike has crossed on the ask side, and implied volatility is decidedly higher, pointing to buy-to-open activity. This theory is confirmed by data from the International Securities Exchange (ISE).

Based on NVDA's price action following its previous eight earnings reports, this bullish positioning isn't surprising. As my colleague Andrea Kramer noted in yesterday's earnings preview, the stock averages a gain of 1.4% the week after posting its quarterly results. Even better for the buyers of the weekly 2/14 calls -- which expire at Friday's close -- the equity has tacked on an average of 2.1% in the subsequent session.

In today's trading, NVIDIA Corporation (NASDAQ:NVDA) is following in the bullish footsteps of the broader Nasdaq Composite (COMP), and was last seen 2.6% higher at $16.67. Earlier, the chip maker hit a roughly two-year high of $16.77.


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