Nvidia shares could see big moves on earnings. How to capitalize on the potential swings
Nvidia enters this week’s earnings print as the clearest test of whether the AI infrastructure trade still has another leg higher. The stock has pulled back toward its recent $215 breakout zone with earnings scheduled after the close on May 20. Implied volatility remains elevated, and options markets are pricing in an 8.1% move in Nvidia around the event. That elevated volatility creates an attractive setup for premium sellers. Over the past several sessions, institutional options flow has shifted from broad semiconductor hedging toward more targeted catalyst-driven put selling, suggesting large traders are becoming more comfortable monetizing earnings volatility rather than aggressively protecting downside. In Nvidia specifically, two large short-put trades were executed just above the current price, risking over $75m yesterday, signaling that institutional investors may view the $220-225 area as a post-earnings support zone. At the same time, the fundamental case remains unusually strong. Nvidia continues to trade at a discount to the semiconductor peer group despite superior growth, margins, and visibility. With the Blackwell ramp still underway, Vera Rubin expected to drive the next upgrade cycle, and the OpenAI partnership creating multiyear demand visibility, the recent pullback looks like an opportunity to sell premium against a well-defined support area. Trade timing & outlook NVDA has pulled back toward the $215–$220 support zone, which lines up with its recent breakout area and the institutional short-put activity ahead of earnings. Support retest: The stock has retraced toward its breakout level near $215, which should now act as first support if buyers remain in control. Upside path: If earnings confirm continued AI infrastructure demand, NVDA could quickly reclaim momentum toward the recent highs and potentially challenge the $240–$250 zone. Fundamentals Nvidia continues to offer one of the strongest growth-to-valuation profiles in large-cap technology. The valuation setup remains unusual: Nvidia trades at a discount to the semiconductor median despite stronger growth, substantially higher margins, and far greater AI revenue visibility. In a market increasingly focused on earnings quality, that combination continues to support the bullish case. Bullish thesis AI infrastructure leadership remains intact: Nvidia remains the dominant supplier for large-scale AI infrastructure, with Blackwell in volume production and the Vera Rubin platform expected to extend the product cycle into fiscal 2027. OpenAI partnership extends multiyear visibility: Nvidia and OpenAI announced a strategic partnership to deploy at least 10 gigawatts of Nvidia systems, with Nvidia intending to invest up to $100 billion progressively as each gigawatt is deployed; the first gigawatt is expected in the second half of 2026 on Vera Rubin. Institutional flow supports the trade setup: Large put sales near $222–$225 suggest institutional traders are willing to underwrite Nvidia downside into earnings, likely aiming to harvest elevated implied volatility rather than position for a major breakdown. Valuation still looks mispriced: Despite being the category leader in AI compute, Nvidia trades below the semiconductor industry’s forward P/E average while producing more than triple the industry net margin. Options Trade To express a bullish view while harvesting elevated earnings volatility, consider Selling the June 18, 2026 $220 / $205 Put Vertical @ $5.93 Credit. This entails: Selling the June 18, 2026 $220 Put Buying the June 18, 2026 $205 Put Maximum reward: $593 per contract if NVDA is above $220 at expiration Maximum risk: $907 per contract if NVDA is below $205 at expiration Breakeven: $214.07 per contract This structure benefits if Nvidia holds the recent breakout zone while allowing investors to collect elevated premium into a major earnings catalyst. View this t rade on OptionsPlay for updated p ricing . Summary Nvidia’s recent pullback toward $215–$220 creates a compelling earnings-week setup. The stock is retesting support, implied volatility is elevated, and institutional put-selling activity suggests large traders are willing to monetize downside premium near current levels. With AI infrastructure demand still strong, OpenAI extending multi-year visibility, and Nvidia trading at a discount to peers despite superior fundamentals, the balance of risk favors selling defined-risk downside premium into the event. DISCLOSURES: Zhang holds a position in Nvidia. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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