Why a Typical Beat-and-Raise May Not Be Enough for NVIDIA This Quarter
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Key Takeaways
$195–$200 Resistance Is the Critical Hurdle: The options market shows massive gamma concentration at the $195 and $200 strike prices, meaning NVIDIA likely needs a blowout earnings surprise — well beyond the typical beat-and-raise — to push through $200 and sustain upside momentum.
Implied Volatility Crush Will Punish Call Holders: With implied volatility near 60% and rising into Wednesday’s report, call premiums are heavily inflated; once earnings pass, IV could be cut in half, causing $6+ options to collapse to roughly $1–$2 regardless of moderate upside in the stock.
Below $180, Market Makers Flip to Sellers: The gamma flip zone sits around $180, meaning above that level market makers buy dips and sell rips (stabilizing), but below it they become directional sellers — opening the door to an accelerated move toward the $170 support level.
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Video
Fully Edited Transcript- By Claude
The Technical Setup and Head-and-Shoulders Risk
Since the elephant in the room is the most important stock in the world, NVIDIA is reporting results this week. I thought it would be worth looking at the options market setup for NVIDIA going into these results on Wednesday afternoon.
For the most part, when you look at the technical chart, you get a really good sense of where the options market is positioned right now. What clearly stands out is that the area around $195 has some importance, and the $170 area has significance as well. When you look at the options market setup, you’ll see why — it has to do with where the put and call walls are from a gamma perspective.
Technically, I have drawn in what could be a head-and-shoulders pattern. I obviously can’t confirm whether that’s the case until we either break the neckline at $170 or take out the $195 to $200 region. But right now, it’s a fairly good-looking head-and-shoulders pattern. If you were to extend that down, you would look for a move into the $130 area. That would obviously be bad not only for NVIDIA but for the entire stock market.
At this point, we don’t have enough information to determine whether something like that could happen, because the $170 area is very important from both an options perspective and a technical perspective.
Implied Move and Volatility Levels Into Earnings
When we look at the options positioning — I use OptionCharts.io, and I find they have everything I need — the first thing I look at is the implied move. The stock is expected to move about 5.7% between now and options expiration on Friday the 27th, which obviously includes when NVIDIA reports results.
The other thing that matters a lot is implied volatility levels. They’re already close to 60% on the $190 strike price, and these levels will continue to rise going into results right up until the close on Wednesday afternoon. It’s also important to remember that NVIDIA now has multiple options expirations during the week — it looks like expirations on the 23rd, the 27th, March 2nd, March 4th, and March 6th. You have to make sure you’re looking at the correct expiration date, because if you use the 23rd, that’s before NVIDIA reports and will show much lower implied volatility. Remember, implied volatility goes up into earnings because of the event risk, and then once earnings pass, implied volatility drops sharply.
Gamma Positioning and the $180 Flip Zone
This matters a great deal. When we look at the gamma exposures for the 27th, $195 is the big gamma strike price, and $200 is another big one. At $180, that’s where your put wall is right now for the 27th. Also notice that we’re in a positive gamma regime. That means as the stock rises, market makers are going to be sellers, and as the stock falls — at least until the point where it rolls over into negative gamma — market makers will be buyers. That flip happens around $185 to $187, and below there they would actually become outright sellers, moving directionally with the stock because we would flip into negative gamma.
When we include all expiration dates (not including the 23rd), you can again see why the $195 level is important — big gamma there. $200 is also a significant gamma level. And the $170 area, which we were talking about technically, is also very important from a gamma perspective. The flip zone across all expirations sits somewhere around $180 per share.
So what this implies is that as long as the stock is above $180, market makers are going to be buyers of the dips and sellers of the rips. Below $180, market makers are likely to be outright sellers, and the big support level would come at $170.
The Options Chain: What Calls Actually Need to Be Profitable
Now, the expected move of the stock is only 5.7%, which puts it in a range between $180 and $200. This is where it’s important to understand your options chain. If we look at the options positioning for the 27th, the $190 calls cost about $5.95, meaning the stock needs to be over $196 for a buyer to start making a profit. If you play the $200 strike, you need the stock above $202. At $195, they’re about $3.62, so you need the stock somewhere around $199 to profit.
This is important because the expected move is basically telling us that if you’re buying the $190 calls, you’re within the range. Anything at $195 or higher, you’re risking the stock not even getting there because it’s outside the expected move. That means you would probably need really good results — something that truly surprises the market — to get this thing over $200.
What this implies is that all the gamma and delta built up at $195 and higher — all those options sitting out there on the 27th expiration — are probably going to be in a worthless-type range. Anyone who owns them may start selling after the company reports, if the stock can’t get above $200.
How IV Crush Destroys Premium After the Report
It’s also important to remember your volatility skew. This is going to rise until the company reports, pushing premiums higher. So a $195 call may have a much higher premium by the time results come out — not because the stock price is moving, but because implied volatility is higher.
Here’s an example: the $195 strike expiring on the 27th currently has 55% implied volatility and costs $3.65. If implied volatility rises to 80% by earnings, those options could be trading at $6.21, meaning the stock needs to be over $200 for a buyer to profit. But once the company reports, that 80% IV may get cut in half. Looking at historical IV, it could drop to around 27%, which means those options are intrinsically only worth about $1. They went from being worth $6 or $7, needing the stock over $201, to only being worth $1. That extra $4 to $5 in premium has essentially evaporated. Even at 40% implied volatility, the premium drops to $2.20 from what had been $6.21.
So immediately once the company reports, these options are going to be worth a lot less than where they were previously.
Delta Unwind and After-Hours Selling Pressure
This is also important from a delta perspective. You can see lots of positive deltas, and these deltas are priced off what the call premiums are worth today. If these options are overinflated because implied volatility is elevated heading into results, the delta values will drop significantly once the company reports. All that delta will be reduced, meaning market makers are going to be hedged against a delta position that’s too high. They’ll have deltas to sell, which means they could actually be sellers of the stock in the after-hours as they unwind hedges.
On top of that, anyone who owns these calls — if the stock can’t get over $200 or so to make up for the loss in the implied volatility portion of the premium — will also probably start selling. When you look at the makeup of the stock overall, not just the 27th, there’s not a lot of negative delta on the board anywhere. That means there’s a good chance that once the company reports, if they can’t push this thing over $200, all those options at $190, $195, $200, $205, and $210 will bleed premium and basically get sold into the last two days of the week as those positions unwind.
The Bigger Picture: NVIDIA as a Proxy for the Market
At the same time, it really implies that this is going to take something better than the typical beat-by-two-billion-and-raise-by-two-billion result. The numbers this company is reporting keep getting bigger and bigger, and that just makes it harder for them to surprise. The stock has basically been trading sideways since the end of July for a reason — the valuation is $4.5 trillion. While revenue continues to grow, the question remains: as more competition emerges, is NVIDIA going to continue to surprise the market the way it has?
The options market setup has a very big hurdle in front of it to get above $200. Now, $200 isn’t terribly far away — it’s only $11 — and I’m not saying it can’t happen. But what I am trying to say is that the way the options market is set up right now, there’s a lot that could come for sale if the stock is unable to clear that level. And $200 is also going to be a significant level of resistance given how much gamma concentration exists there.
So this is just a simple way to look at the options market. The technical chart gives you the same sense — how important the $195 area is, how important the $170 area is. And while $200 isn’t easy to pinpoint on the chart, the $200 to $205 zone certainly gives you a sense that it’s the very upper end of the range where strong resistance is likely.
That’s my interpretation of how the stock is set up going into results. We’ll just have to see what happens. But basically, NVIDIA has been a proxy for the entire S&P. I don’t think it’s by chance that the market has stalled out roughly in line with NVIDIA over time, and I don’t think it’s by chance that the Nasdaq has stalled out and is struggling more than the S&P — because NVIDIA has not been able to recapture its all-time high. Given the weighting and importance of this stock, if you start seeing NVIDIA falter, I would imagine the market would falter along with it. It would be pretty hard for it not to. It’s been a tough period of time, and NVIDIA is obviously the biggest piece of that equation.
Defined Terms and Jargon
Gamma: A measure of how much an option’s delta changes as the underlying stock price moves; high gamma at a strike means large hedging flows near that price level.
Gamma Flip Zone: The stock price level at which market makers shift from being stabilizing (buying dips, selling rips in positive gamma) to directional (selling into declines in negative gamma).
Implied Volatility (IV): The market’s forecast of how much a stock is expected to move, reflected in option premiums; IV rises into events like earnings and drops sharply afterward (IV crush).
Delta: The sensitivity of an option’s price to a $1 move in the underlying stock; also used to measure market makers’ hedging exposure that must be adjusted as conditions change.
Put Wall / Call Wall: Strike prices where the largest concentrations of put or call open interest create natural support or resistance levels due to market maker hedging activity.
Head and Shoulders Pattern: A bearish technical chart pattern with three peaks — the middle one being the highest — where a break below the “neckline” connecting the two troughs signals a potential decline.
Volatility Skew: The variation in implied volatility across different strike prices and expiration dates, which shifts as market conditions and event risk change.
IV Crush: The sharp decline in implied volatility — and therefore option premiums — that occurs immediately after an anticipated event like an earnings report removes the uncertainty.
Disclaimer
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