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Tech bellwether Nvidia
NVDA is due to report earnings on Feb. 26 after the close of trading. The price of options can give you an idea of just how much a stock will move after earnings are reported. Specifically, the price of the at-the-money straddle (call price + put price) is the market’s estimate of the size of the move that is going to take place after the earnings announcement.
As has been the case for several quarters now, Nvidia options are somewhat expensive heading into the earnings. In the fourth quarter of 2024, for example Nvidia’s at-the-money 146 straddle was selling for 14 before earnings. On the day after the earnings, Nvidia traded eight points higher at its zenith, traded about four points lower at its nadir, and closed one point higher. Paying 14 for the straddle was not a winning trade.
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