Nvidia is set to report earnings after the market closes on May 20, and the stock has recently retraced to the $215 breakout zone. This pullback coincides with elevated implied volatility, with options markets anticipating an 8.1% price movement around the earnings announcement.
Notably, institutional investors have shifted their strategy from broad semiconductor hedging to targeted put selling, indicating confidence in Nvidia's performance. Two significant short-put trades were executed just above the current price, suggesting that large traders see the $220-225 range as a support level post-earnings.
Nvidia's fundamentals remain robust, trading at a discount compared to its semiconductor peers despite superior growth and margins. The company is also positioned well for future demand, with ongoing production of its Blackwell platform and a strategic partnership with OpenAI that promises multiyear revenue visibility.
Analysts believe that if Nvidia's earnings confirm strong AI infrastructure demand, the stock could regain momentum and challenge higher price levels around $240-$250. The current market setup, characterized by institutional support and favorable valuations, suggests that selling premium against defined support levels could be a strategic move for investors ahead of the earnings report