NVDA’s earnings report has been a key driver of volatility for the S&P 500 and other major ETFs over the past two years. Option pricing suggests that investors expect this NVDA earnings day to be very significant. NVDA 27-Feb straddles imply a +/- 10.3% move over the next two days, while NVDA has averaged a move of +/-9.2% on its past 8 earnings days.
In today’s note we highlight the top 20 ETFs that have historically made large moves on NVDA earnings. Among the top movers, SMH, QQQ and SPY options are pricing a bigger implied move than normal.
NVDA positioning ahead of tonight’s earnings event: NVDA options have been very active accounting for 15% of all single stock options volumes over the past month; while this is below 2024 levels, it remains one of the top stocks by dollar options volume. Put-call skew levels suggest investors are bearishly positioned relative to recent NVDA earnings events, but we also note that put-call skew for the average S&P 500 stock has turned bearish over the past week.
Trade #1: Buy DELL straddles ahead of earnings (27-Feb AMC); Michael is bullish on DELL as he believes the market is underestimating the potential growth benefits from AI trends. He notes that investor sentiment has remained largely negative with near-term focus on AI server margins.
Trade #2: Buy MDB calls ahead of earnings (5-Mar AMC); Kash sees compelling risk-reward for MDB driven by attractive valuation levels and opportunities for a beat & raise cadence throughout FY25 on the back of multiple growth levers and strong fundamental execution.
Trade #3: Buy BURL calls ahead of earnings (6-Mar BMO); Brooke is constructive on off-price retailers, where she expects the sector to see strong market share gains and operating margin expansion in 2025.
Trade #4: Buy NCLH straddles ahead of earnings (27-Feb BMO); Lizzie is constructive on NCLH ahead of upcoming earnings as she expects the company to deliver a beat on the quarter and 2025 guidance given low investor expectations. She sees key investor debate centered around yield and cost dynamics.
Trade #5: Buy NTRA calls ahead of earnings (27-Feb AMC); Matthew is constructive on NTRA ahead of upcoming earnings as he sees a relatively low bar for FY25 numbers against multiple revenue drivers.
Trade #6: Buy GWRE straddles ahead of earnings (6-Mar AMC); Adam is constructive on GWRE, as he is encouraged by visibility into long-term growth but sees near-term investor focus centered on the magnitude of quarterly outperformance & changes to guidance against a backdrop of challenging prints from other back office software companies.
Trade update: Today we close our recommendations to buy calls on V at a profit and puts on FND at a loss. Between publications our recommendation to buy calls on WING and ANET expired at losses.
