JPMorgan is urging investors to consider a bullish options bet on Nvidia in anticipation of the company’s upcoming earnings report. Nvidia, which currently holds the title of the most valuable stock globally, has seen its performance lag behind that of its semiconductor counterparts over the past three months. This divergence comes as the company prepares to release its fiscal 2026 third-quarter results, expected after Wednesday’s market close.
Analysts at JPMorgan believe that if Nvidia surpasses earnings expectations and provides positive indicators regarding its ability, along with its suppliers, to meet the surging demand for artificial intelligence solutions, it could trigger a significant rally in the stock. Such a rally would likely allow Nvidia to recover and align itself with its historical performance levels.
Bram Kaplan, the head of America equity derivatives strategy at JPMorgan, stated, “We favor owning call spreads as a strong beat-and-raise from NVDA and positive commentary around supply could clear recent sector underperformance and could propel NVDA above its average historical move.” The firm is recommending a strategy involving call spreads, which allows investors to capitalize on a potential earnings surprise.
The market’s implied move for Nvidia’s stock is projected to be about +/- 6.4%. To achieve a break-even point on their options position by expiration, investors would need to see Nvidia’s shares rise above $199.30. The stock has been trading in a range between approximately $180 and $210 since late September, meaning the recommended upper strike on the call spread is set just below the stock’s peak of $212.19 achieved on October 29.
If successful, investors utilizing this strategy could see a maximum gain of roughly 550% of the premium paid for the options. Conversely, the maximum loss would be equal to the total premium paid, highlighting the high-risk, high-reward nature of such trades.
