CNBC’s Options Action: Insights from Mike Khouw on Nvidia’s Upcoming Earnings and Options Trading
On a recent episode of CNBC’s Options Action, the show’s traders were joined by Mike Khouw, the co-founder and Chief Strategy Officer at Optimize Advisor, to discuss the upcoming earnings report from tech powerhouse Nvidia (NVDA) and the options trading activity surrounding it.
Nvidia’s Earnings Preview
Mike began by providing some context on Nvidia’s recent performance and the expectations for its Q3 earnings report. He noted that the stock had been on a tear in recent months, up over 100% year-to-date. However, there had been some profit-taking in the days leading up to the earnings release, which might indicate some nervousness among investors.
“The Street is looking for earnings of $1.34 per share on revenues of $7.3 billion,” Mike explained. “But the real focus will be on guidance for the current quarter and beyond. Nvidia has been a major beneficiary of the shift to remote work and online learning, so any indication that demand for its products is slowing down could be a cause for concern.”
Options Trading Activity
Mike then turned his attention to the options market, where he saw some interesting activity. He pointed out that the implied volatility on Nvidia’s options was quite high, which suggested that traders were expecting some big moves in the stock around the earnings report.
“Looking at the options chain, we can see that there’s a lot of interest in the $550 and $600 strike prices,” Mike noted. “That suggests that some traders are positioning for a potential move in either direction. If Nvidia beats expectations, we could see the stock push towards $600. But if it misses, we could see a selloff down to $550 or even lower.”
Impact on Individual Investors
For individual investors, Mike offered some advice on how to approach the earnings report. He recommended keeping an eye on the guidance for the current quarter and beyond, as well as any comments from management about demand trends and supply chain issues.
“If you’re long Nvidia, you might want to consider selling some covered calls to generate some income,” Mike suggested. “Or, if you’re bearish, you could consider buying a put spread to profit from a potential selloff. But remember, options trading involves risk and is not suitable for all investors.”
Impact on the World
Beyond the immediate impact on Nvidia shareholders, the earnings report could have broader implications for the tech sector and the economy as a whole. Mike noted that Nvidia is a bellwether for the semiconductor industry, which is a key driver of innovation and growth.
“If Nvidia reports strong earnings and guidance, it could be a positive sign for other tech companies and the broader market,” Mike explained. “But if it misses expectations or provides weak guidance, it could be a cause for concern. We’ll be watching closely to see what the earnings report tells us about the state of the tech sector and the economy as a whole.”
Conclusion
In conclusion, the upcoming earnings report from Nvidia is a key event for tech investors and the broader market. With options trading activity suggesting that some big moves are possible, it’s important for investors to stay informed and be prepared for any potential developments. As Mike Khouw and the Options Action traders highlighted, the report could provide valuable insights into the state of the tech sector and the economy as a whole.
- Nvidia’s Q3 earnings report is expected on October 19, 2021
- Analysts are looking for earnings of $1.34 per share on revenues of $7.3 billion
- Options trading activity suggests that the stock could see big moves around the report
- Individual investors are advised to monitor guidance for the current quarter and beyond
- The report could have broader implications for the tech sector and the economy as a whole
