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Nvidia: How options traders are betting on chipmaker's stock

As Nvidia (NVDA) shares move lower ahead of its earnings report on Wednesday, options traders are becoming increasingly bullish on the chipmaker's stock.

Yahoo Finance Senior Reporter Jared Blikre breaks down forecasts surrounding Nvidia, taking into consideration the company's market cap gains.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

[AUDIO LOGO]

JULIE HYMAN: Nvidia shares getting hit ahead of earnings tomorrow after the close. The company shedding roughly $100 billion in market value. That's the equivalent of Starbucks. And the move on the results could be even bigger. Jared Blikre is here with a closer look. What's up, Jared?

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JARED BLIKRE: Hope you like some apples-to-oranges market cap comparisons because we got a lot of those here. I kid. I kid. First, I want to show you this is one year's worth of price history. These vertical lines represent earnings dates. And what's interesting is the last two, we have really seen not much price movement to the upside. In fact, we have seen these marked interim tops in the stock.

But you go back three earnings reports. And guess what? That was the biggest earnings report that's delivered gains, market cap gains like that, to a stock like this ever, at least for Nvidia. I think it's one of the top five all time. And we'll check that in a second.

And one of the things interesting here is I was looking at the options activity, and the current price is $694.52. Well, we have options activity going all the way up to 1,300. And if you're doing the math, that's about an 80% increase over the current price. And in fact, there is the most call activity at that 1,300 strike price.

And just going down, there's a lot of interest all the way down to a thousand. So there's huge, huge bullish bets here, something like 1.7 for-- 1.7 for every one bet calls versus puts there. It puts the put call ratio at about 0.82, put it that way. And if it's less than 1, that means there's more calls, and that is bullish.

Let me just show you, I was talking about some of the biggest one-day market cap gains ever. There is a 10.5% move that is implied by the option market for Nvidia tomorrow after earnings bleeding into the next day. And in fact, that would put that move at $177 billion. That would take the number six slot here. And I was mentioning, Nvidia already had one of those big days. That was the last May, 184 billion, that number 4 record. They could go for number 6 tomorrow if the option market is simply correct.

And then I was tracing out, I thought this would be a good segue into the race. We've been tracking all these companies from 1 trillion to 2 trillion, only two have done it so far. That would be Apple and Microsoft. Apple did it in about 200-plus days here. Microsoft did it in 500-plus days. What I did not show is Amazon and Alphabet, which are still ongoing, they are each taking more than a thousand days. So you'd be way off this chart Here

But here is Nvidia, might get there faster than Apple did it. And in fact, if we were to draw Meta in here-- hard to see there with that yellow line. Let me draw a little red in there. If you were to put meta in here, it just past 1 trillion. It has already shot up quite a bit. And so it might take the cake here. But we'll have to see if Meta can generate that kind of interest going forward.

Just want to close with a market cap look of the day. This is going to be the NASDAQ 100. And I'm going to throw our market cap numbers in here. Let's see if we can get that up. Well, if we're not going to acquire-- there we go. Nvidia, by the way, finished below. Amazon and Alphabet they've been jockeying for position there. Nvidia was on top of those three last week. And now it's at the bottom heap of those three today.

- Jared Blikre, thank you, my friend.