Nvidia Stock Options Imply a Bigger-than-average Move After Earnings

By Tomi KilgoreMarketsMarketWatch Pulse

Nvidia Corp. option traders appear to be expecting some fireworks in the stock after the graphics chip maker reports second-quarter results after Thursday's closing bell. An options strategy known as a straddle, which involves the simultaneous buying of bullish and bearish options expiring Friday at strike prices near current prices, is implying a one-day post earnings move of about 11% in either direction, according to an analysis of data provided by FactSet. That's well above the average post-earnings move of 7.8% after the past 20 quarterly reports; the median move was 6.3%. During that time, the average move during up days has been 10.5% while the average move on down days was 2.8%. The implied move is more in line with the average of 12%, and the median of 10.5%, over the past 10 quarters. The stock, which closed at a record $172.35 on Monday, slumped 2.7% in afternoon trade ahead of the results. It has rocketed 38% the past three months, while the PHLX Semiconductor Index has edged up 2.9% and the S&P 500 has gained 2.1%.

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