Options Traders Load Up On Nvidia Calls Ahead of Earnings

Nvidia will report earnings after the close tonight

Managing Editor
Nov 14, 2019 at 11:58 AM
facebook twitter linkedin

Earnings season isn't over yet. After the close tonight, semiconductor concern Nvidia Corporation (NASDAQ:NVDA) will step into the earnings confessional for its third-quarter report. Ahead of the event, NVDA is down 0.3% to trade at $208.01 today, up 40% in the past three months, with its ascending 10-day moving average providing support since September. Amidst this hot streak, call traders have taken a liking to the chip stock.

Daily Stock Chart NVDA

At last check, over 25,000  Nvidia calls have changed hands today, 1.6 times the average intraday amount and more than double the number of puts traded. The November 210 and 220 calls are active, and there are also new positions being opened at the June 260 call. Those targeting the former are expecting a solid pop from Nvidia shares by the time the options expire at the close tomorrow.

Looking at Nvidia's earnings history, there's a history of mixed reactions. In the last two years, the equity has seen four positive next-day earnings reaction, including a 7.3 burst in August. Overall, NVDA has averaged a 6.1% post-earnings swing, regardless of direction. This time around, the options market is pricing in an even bigger next-day move of 9.9%. 

Call buying has been nothing new, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where the 10-day call/put volume ratio of 2.32 stands in the 64th annual percentile. Plus, peak front-month open interest coming into today was at the December 205 call, where major buy-to-open activity has been confirmed.

Despite the looming earnings date, NVDA options can be had for a bargain. In fact, the stock's Schaeffer's Volatility Index (SVI) of 40% is in the 17th percentile of its annual range, suggesting options players are pricing in relatively low volatility expectations for Nvidia right now. 

Plus, the equity's Schaeffer's Volatility Scorecard (SVS) of 90 (out of 100) shows NVDA's strong tendency to make bigger-than-expected moves during the past year, relative to what the options market was pricing in.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners