The biggest VIX pump in history on one stock's earnings, NVDA.

The biggest VIX pump in history on one stock’s earnings, NVDA.

Andrew Giovinazzi

BY ANDREW GIOVINAZZI

August 29, 2024

Yo Pit Crazies,

The Trading Desk special ends at 11am tomorrow. After that prices go up bigly. Learn to trade time decay and you will be much happier.

Maybe not the biggest in history but a 2.5 point VIX move on a barely moving SPX is noteworthy. It did press VIX close to Zone 2. Segue to NVDA.

This was Nvidia Corp (Ticker: NVDA) just after the announcement. Beat earnings but not in the perfect, parabolic way that folks have come to expect. At this level, I think it will be hard for NVDA to just keep running and running. Remember this was the most bid earnings cycle in a long time and Mark did a little Statsgeeking and historically, when IV was bid this high, NVDA underperformed the earnings straddles. It appears it will do so again. Go Mark!

What did take off today was VIX.

VIX 5 day chart with sigma vols on the bottom

Is there any fire to that smoke?

Let’s see.

A 3 day weekend should have some VIX relief

On the SPX snap below, traders were ready to discount volatility into the 3 day weekend starting on Tuesday. That changed quickly today when SuperMicro Computer Inc (Ticker: SMCI) said they were going to hold back earnings. SMCI is a big NVDA customer.

Implied volatility caught a hefty bid and at this point, traders were pricing a pretty decent selloff going into Wednesday’s close. There might be more to this than meets the eye. Core PCE and GDP numbers come out this am. If they are really bad, we might see some short term fireworks but it will be hard for it to last.

2024 is the year selloffs get gobbled up and I don’t see much to change that. The OP Yield Zone was holding positive into the close so we did not get that mad dash for protection at the end of the day.

It could be very nice in the Trading Desk today. I will report.

To Your Trading Success,