NVIDIA is scheduled to release its Q1 FY2027 earnings after the market closes on Wednesday, May 20th. Data from the options market indicates traders are preparing for potentially significant two-way volatility in the AI giant's stock price, with an expected market capitalization swing of approximately $350 billion.
**Options Market Pricing: Volatility Rises to 53%** Based on options positioning data, the market anticipates NVIDIA's stock could move roughly 6.5% in either direction on the day following the earnings report. This expectation is higher than the 5.6% implied move ahead of its February earnings but remains below the historical average post-earnings move of 7.6%. Given NVIDIA's current market capitalization of about $5.4 trillion, a 6.5% swing translates to a change of approximately $350 billion in market value, which exceeds the standalone market cap of roughly 90% of the constituents in the S&P 500 index. The implied volatility for these options has climbed to around 53%, while the stock's historical average actual volatility post-earnings is only 3.2%. This significant gap suggests the options market is paying a substantial premium for the uncertainty surrounding the earnings event.
**Mixed Signals: Bullish Sentiment Amid Caution** The structure of the options chain presents complex, mixed signals. The trading volume of call options is approximately double that of put options. On Monday, the total premium paid for NVIDIA options surpassed $1.3 billion, with call options accounting for a dominant $1 billion of that total. Chris Murphy, co-head of derivatives strategy at Susquehanna, noted that the options skew has shifted towards the call side, indicating the market is not just paying for downside protection but increasingly paying to participate in potential upside moves. However, signs of concern are also present. Last Friday, $114 million in premium for call options with a $235 strike price evaporated entirely as the stock price declined. Data from SpotGamma also shows increased buying of large put options on semiconductor ETFs, which is viewed more as tail-risk hedging rather than a direct directional bet on NVIDIA.
**Goldman Sachs Warns of Extreme Overbought Technicals** In a briefing on Monday, Peter Callahan, Goldman Sachs' chief TMT specialist, highlighted that the Philadelphia Semiconductor Index is trading about 60% above its 200-day moving average. This level of deviation has not been seen since the peak of the internet bubble in 1999-2000. He wrote, "As we head into the end of this week's earnings season and into summer trading, it is worth keeping these tactical dynamics in mind."
Market consensus expects NVIDIA's Q1 earnings per share to be in the range of $1.70 to $1.76, with revenue anticipated between $70 billion and $79 billion. Analysts widely believe that, compared to the results for the just-ended quarter, the company's forward guidance for Q2 could serve as a more significant catalyst for the stock price.
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