Nvidia's upcoming earnings report faces high expectations, with options pricing suggesting traders anticipate a significant stock move. However, historical data shows implied volatility has often overestimated actual post-earnings swings, and shares have recently declined after reports.
US stocks rebounded from a potential major sell-off, with the Nasdaq 100 rallying 1.5% and the S&P 500 closing just 12 points lower. Despite market turbulence, the Cboe VIX Index (volatility measure) ended lower, suggesting a potential hedging opportunity as semiconductor stock volatility outpaces the broader market. Options traders showed interest in VIX calls, while bearish sentiment was clear in long-term bond ETFs following CPI data.
Retail traders are buying calls at the heaviest 10-day clip since 2021, with 52% of new positions being call-buying, amid a surge in tech stocks and a new record for the Nasdaq-100.
The S&P 500 reached record highs while the VIX 'fear gauge' also rose, an unusual combination that typically occurs only 20% of the time. Analysts offer two interpretations: a bearish view where investors doubt new highs and hedge against risks like Iran conflict and crude oil, or a bullish perspective where traders are buying expensive upside calls in semiconductors and tech stocks. The VanEck Semiconductor ETF shows 25% larger call premiums than puts, with Marvell Technology stock doubling since earnings and traders paying $2.4 million for June call contracts.
