Struggling Semiconductor Giant Prepares for Earnings

NVDA is more than 40% lower in 2022

Deputy Editor
May 25, 2022 at 1:17 PM
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Semiconductor name NVIDIA Corporation (NASDAQ:NVDA) is moving higher ahead of its first-quarter earnings report, which is due out after the close today. The security was last seen up 3.1% at $166.54, attempting to distance itself from its recent 11-month lows. Pressure from the 20-day moving average has kept a lid on NVDA since early April, while it continues to hold just above its year-over-year breakeven mark. In 2022, however, NVIDIA stock sports a 43.4% deficit. Below, we will take a closer look at the equity's previous post-earnings activity, and what kind of response options traders are pricing in this time around.

NVDA Chart May 25

The equity has had a history of positive post-earnings reactions over the past two years. Specifically, five of these next-day sessions were flat or higher. Options traders are pricing in a 14.9% post-earnings swing for the stock this time, which is much larger than the 4% move NVIDIA stock averaged after its last eight reports, regardless of direction. 

The options pits are firmly in the bearish camp. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio sits higher than 86% of readings from the past year. In other words, puts have been picked up at a faster-than-usual clip in the past 10 weeks.

Lastly, the security's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 96 out of 100, indicating the equity has exceeded option traders' volatility expectations in the past year.


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