NVIDIA Stock Moves Lower Ahead of Quarterly Earnings

The options pits have been bullish ahead of the event

Digital Content Manager
Aug 17, 2021 at 2:59 PM
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Semiconductor name NVIDIA Corporation (NASDAQ:NVDA) is cooling off ahead of its second-quarter earnings report, which is due out after the close on Wednesday, Aug. 18. The security was last seen down 3.2% at $193.17, pulling back from a rally attempt toward its July 7, record high of $208.75, made earlier this month. The $192 level has contained today's pullback, alongside the ascending  50-day moving average, which has been a solid source of support for shares since May. Below, we will take a closer look at NVDA's overall technical performance, as well some of its previous post-earnings activity. 

NVDA 50 Day

The equity has had a mixed history of post-earnings reactions over the past two years. Specifically, four of these next-day sessions were higher, while one was flat, and three were lower, including an 8.2% drop in February. Options traders are pricing in a 7.7% post-earnings swing for the stock this time, which is much larger than the 3.7% move NVIDIA stock averaged after its last eight reports, regardless of direction. 

The options pits are firmly in the bullish camp. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 3.19 sits higher than 94% of readings from the past year. In other words, calls have been getting picked up at a faster-than-usual clip in the past two weeks.

Plus, NVDA's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 73 out of 100. This means the equity has exceeded options traders' volatility expectations in the past year -- a boon for premium buyers.

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