Something very unusual is happening with Nvidia options
Nvidia's upcoming earnings report is generating significant interest in the options market. Unusually, short-dated call options for Nvidia are trading at a premium compared to put options, indicating a shift in investor sentiment. This positive skew suggests that the market is anticipating more upside potential than downside risk.
- ▪Nvidia is considered almost an asset class in itself.
- ▪Short-dated calls for Nvidia are trading at a premium to puts ahead of earnings.
- ▪This positive skew is uncommon in equities and indicates more uncertainty to the upside.
Opening excerpt (first ~120 words) tap to expand
There are stocks and then there is Nvidia.The chip giant is almost an asset class in itself, and that makes Wednesday night's earnings a market event. But as investors gear up for the big print, something curious is happening in the options pits.When it comes to options markets, convention is almost always the same: investors pay up for downside protection, pushing implied volatility on out-of-the-money puts above that of equivalent calls. It's the fingerprint of a market that hedges first and speculates second. Nvidia is currently flipping that script. Ahead of earnings, NVDA's short-dated calls are trading at a premium to puts. Positive skew is genuinely uncommon in equities. The market is, in effect, pricing more uncertainty to the upside than the downside.
Excerpt limited to ~120 words for fair-use compliance. The full article is at CNBC — Investing.
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