NVDA Pre-Earnings Plunge: Will the Surge in Implied Volatility Trigger a Sell-Off?"

$英伟达(NVDA)$ stock had a big drop last, before its earnings, seemingly influenced by two pieces of news:

1) Microsoft is developing a new product to reduce dependence on NVIDIA graphics cards, and

2) Silicon Valley startup Groq, with its self-developed LPU chips, claiming the LPU chip is 10 times faster than NVIDIA GPUs.

While these announcements may not immediately impact NVIDIA's sales for the current year, they have tempered investors' enthusiasm, serving as a reminder to the investors of the competition and challenges that NVIDIA faces.

There's already been plenty of analysis on its earnings, I won't delve into it.

I currently don't hold any positions in NVIDIA due to the rapid rise in stock prices.

Before, I had considered selling some calls ahead of the financial report, with selling IV and its short-term performance realization. However, as the market started to fall at the opening yesterday, I refrained from taking action.

Unexpectedly, the market was already pricing in better-than-expected performance, with some major institutions suggesting a potential 10% decline if the financial report missing.

While the market anticipated a roughly10% price movement due to the report, it had already dropped by more than 4% last night. If there's further decline today, it would likely complete the expected report-related volatility, making additional significant declines less likely.

Looking at the option IV, the IV for this week's expiring NVIDIA options is around 140-150%, likely setting a record for NVIDIA IV.

From the traded volume of this week's expiring options yesterday, despite the significant drop in stock prices, the majority of bets were on calls.

However, looking at open interest (OI), it seems a demand for selling calls. This could be for selling covered call to hedge. Others, some traders make option spreads. Looking at the most active options with an expiration on the 23rd, the call with a strike price of 800 had an IV of around 130%, with nearly 30,000 in volume last night and an open interest of only around 10,000.

If the stock has a significant rebound tonight, I might consider selling 800 calls. If the stock continues to drop, by 3-4%, I might directly go for selling puts, possibly choosing $580-600 at strike prices, as the IV is over 100%, and premiums for selling puts below $600 are attractive. If things stabilize, I'll wait for the report.

Additionally, since the market has accumulated significant gains in the previous period, with overall high IV for the market or tech stocks, it indicates that many have accumulated substantial profits and are looking for hedging via options. After NVIDIA's financial report, there may be a IV decline in overall market.