NVIDIA Corporation (NVDA), the popular AI juggernaut, is always trending in the news and on social media.
During the last 2 years options investors have consistently underestimated the size of NVDA moves. That is great news for option buyers!
There are many potential catalysts that could cause the stock to make a bigger-than-expected move before November 15th. Recently, investors were worried that NVDA would not be able to keep up with the extremely high demand for their new Blackwell chips. Yesterday the company gave assurance that their production capacity for the new chip will be okay. The stock finished up 2.43% on the day.
This morning, headlines are talking about government restrictions on selling chips to China and other countries that represent national security risks. As of this writing, the stock is down nearly 1% in pre-open trading. Good or bad news can be a potential catalyst any day.


This Volatility Term Structure chart for NVDA shows us the implied volatility for the at-the-money options for each expiration. This chart shows that options expiring November 15th have lower volatility expectations compared to all later terms. Then after that November 15th term, there is a spike in volatility expectations due to the uncertainty surrounding the scheduled earnings report on November 20th. While NVDA certainly does make big moves around earnings reports, the stock absolutely does NOT need an earnings report to make a bigger-that-expected move.

This MDM graph compares the modeled expected distribution for future stock prices (the orange line) with the actual distribution of NVDA’s share prices over the past 2 years (the blue histogram). You can see that the actual stock movement shows that NVDA tends to make big moves more frequently than November 15th options prices expect. There are many potential catalysts that could cause the move we are looking for with an option buying strategy.

This Volatility Cone chart for NVDA compares implied volatility expectations for each term to the historical volatility for that same term. The blue line shows the average historical volatility; the purple lines show each HV measure’s highest high and the lowest low over the past 2 years. You can see that the one-month term (which is the term we are interested in) is below the 2-year historical average. This confirms that options expiring on November 15th are relatively inexpensive.

NVDA is always trending in news and on social media. It’s interesting that social media mentions are actually down -99% in the last 24 hours. But the stock is so popular that it still outshines many other stocks that are in the spotlight. The fact that social media mentions are down may work in our favor. We may have less competition as we try to buy options at a low price.
To get the specific details and prices on today’s trade ideas, be sure to read today’s ODDS Online Daily Option Trade Idea.

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Thank you,
Don Fishback
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