All Eyes Peeled to NVDA and their Earnings Due After Market

Tom Gentile

Posted in
Newsletter

By: Tom Gentile
February 28th, 2024

3 mins read

Originally published via our newsletter previously. Subscribe for early access!

I do not have a crystal ball. Nor a Magic 8-Ball. I don’t have a bunch of tea leaves or astronomical charts to help gauge whether or not NVS will beat or miss their expected earnings report today after the close of market.

I have no idea what they will offer by way of company guidance on earnings in the next or future quarters.

I can’t tell you if they will have new products or services nor do I even dare guess how NVDA is going to shape the world with their innovations with AI.

When it comes to the potential price or percentage of their stock price pop or drop in price I DO have a way to run analysis on the options data to see what the market makers are pricing in for that potential price move on the earnings announcement.

I teach this way to do the analysis in the ‘Tools and Observations’ section of this weeks’ newsletter.


Market in Focus XLK – Technology Select Sector SPDR Fund (XLK)

I know we highlighted this chart last week, but with NVDA due out today after the close it is worth it to highlight it again.

NVDA Earnings
NVDA Earnings

Not that NVDA is the sole catalyst for the XLK (or for the markets overall), but the fact it is a tech giant what they say about their future earnings per share and revenue guidance, more so than just the announced numbers, can make or break what happens to NVDA.

What NVDA says about their future outlook could affect what investors feel about other stocks in the same industry / sector.

If they go up or down in sympathy with NVDA will be seen in their charts and as I see it, in the chart of the XLK.

Tools and Observations

I have shown this exercise in the past. The exercise of assessing how much a security could pop or drop upon their earnings announcement.

The process is to look at the next month out standard third Friday expiration and to look at the ‘At the Money’ strike priced options.

One is to add the two premiums together and that is the market makers way of showing the anticipated price move in the security.

NVIDIA Corporation, (NADSAQ: NVDA) reports earnings today after the bell.

We are not looking at what the actual number is, what they forecast for future eps and revenues. This exercise is done to assess the price of opening up a straddle on NVDA.

It is then up to you if you want to actually pursue this as an actual trade (to be discussed between you and your broker).

If you feel the stock can pop higher or lower the straddle cost after earnings are announced AND you feel it could exceed the cost of the straddle to be ‘In the Money’ for the calls or the puts enough to be profitable so one can close the trade the next day after the announcement.

At the time of this writing NVDA is trading at $666.10 and the March $

Image 3

The combined cost for both legs, which constitutes the trade, is $86.65 or $8,665 per contract.

The current price of NVDA is 666.10 so the $86.65 equates to 13% of the stock price.

If you look at the risk graph for this straddle you also see the light blue lines indicating the breakeven or the price level higher or lower to break even on the trade, (light blue, horizontal lines).

Image 4

It’s possible more profits are attainable the more NVDA’s price exceeds those break evens higher or lower.

Tom Gentile
C1P: Chief 1-Percenter


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