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Nvidia Options Are Priced For A Perfect Earnings Outlook. These Are Your Smarter Trades.
Earnings reports will flood the market next week. Could this be the juice the S&P 500 needs?Nvidia founder and CEO Jensen Huang speaks at CES on Jan. 6. Nvidia will report quarterly earnings next week.A sizeable number of companies are reporting earnings next week - none more closely watched than Nvidia, which is due to report on Feb. 25 after the market close.As has become the norm, the near-term option straddles on Nvidia are predicting a far greater move than has historically been the case. Over the past 10 earnings reports, the median move of the stock has been 3.2% on the day after earnings are reported. The three most recent post-earnings moves were down 3.15%, down 0.78%, and up 3.24%. Yet the at-the-money straddle expiring on Feb. 27 - which is the option market's best indicator of what it expects the post-earnings move to be next week - is currently priced at around 7%. So the Nvidia earnings straddle is not a buy at these prices.
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