Nvidia (NVDA) Tops Earnings Estimates

After the close on Wednesday, Nvidia (NVDA) once again topped earnings estimates but the reaction was muted as shares were down 3%. The company topped forecasts by six cents a share with revenue also beating by $1.9 billion.

There have been times where this stock has lifted the entire market but the parabolic rise seems to have settled down in recent months. That could change, however, as the chart still looks very bullish. The recent all-time peak is at $149.77 and another breakout could occur if shares clear the $150 level.

If shares remain weak into Thursday’s open, a close below $140 would be a slightly bearish development for the stock and could weigh on the major indexes. This level was prior resistance on June 20th and again in mid-October.

We normally don’t trade higher priced, near-term options but we checked-in on the regular NVDA January 150 calls to see what they were fetching. They closed Wednesday a shade above $10 and were heavily traded as 22,000 contracts exchanged hands.

It will be interesting to see where these calls close by the end of the week but they don’t expire until January 17th, 2025. If shares trade to $160 by then, this trade would breakeven if these calls were bought ahead of the earnings announcement. If shares top $170, these calls would he at least $20 in-the-money for a 100% return.

Of course, if shares remain below $150 by January 17th, these call options would expire worthless.

The NVDA January 150 puts closed at $13.25 on Wednesday. If shares are above this level by January 17th, these puts would expire worthless. The breakeven point would be if shares are below $137 with a double occurring if the stock is under $124. We will check back on NVDA in a couple of months.