Options indicate that Nvidia’s earnings report could lead to a $200 billion fluctuation in share prices

Traders are bracing for a significant move in Nvidia’s shares following the chipmaker’s earnings report on Wednesday, with options markets indicating an 8.7% swing in either direction by Friday. This potential swing could result in a market cap fluctuation of $200 billion, surpassing the market capitalization of the majority of S&P 500 companies.

Despite the substantial implied move, it falls short of the 16.4% surge Nvidia experienced after its last quarterly earnings report. Additionally, the expected volatility is lower than the average 12% move that traders had anticipated over the past eight quarters.

Nvidia, a key player in the AI industry, has seen its stock rise by 87% this year, solidifying its position as the third-largest company on Wall Street. Analysts are optimistic about a strong quarterly report from Nvidia, which is considered a bellwether for the AI sector.

Investor interest in AI-related companies has been growing, with BofA strategists noting that the benefits of AI are expanding beyond tech to sectors like power, commodities, and utilities.

While expectations are high for Nvidia’s earnings report, options traders are preparing for potential upside surprises, as implied volatility for out-of-the-money calls is on par with out-of-the-money puts. This suggests that traders are not ruling out further gains for the stock.

As the AI trade continues to gain momentum, a significant downturn in Nvidia could test investors’ confidence in the broader sector. Analysts are closely watching Nvidia’s earnings report for any signs of weakness that could impact the AI industry as a whole.