Nvidia is set to release its first-quarter earnings report, which is highly anticipated and could have a significant impact on the stock market. The chipmaker’s growing revenue and profits have been a driving force behind much of the S&P 500’s earnings growth in the past year. Bank of America has shared strategies for investors to protect themselves from the potential influence of Nvidia’s earnings on the broader market.
Options prices indicate that Nvidia’s stock could move up or down by 8.5% following its earnings report, lower than the predictions from previous releases. Nvidia’s AI-focused GPUs have played a major role in driving the S&P 500’s earnings growth, accounting for 37% over the past year. However, looking ahead, Nvidia’s contribution to the S&P 500’s earnings growth is expected to decrease to 9% in the next 12 months.
Bank of America suggests that investors hedge against the risk posed by Nvidia’s earnings by purchasing call or put options on Nvidia itself, rather than on major indices like the S&P 500 or Nasdaq 100. This strategy allows investors to bet on whether the stock market will rise or fall based on Nvidia’s performance. The bank recommends Nvidia options over indices like QQQ, SPY, and SMH, stating that Nvidia options offer better value due to their lower cost and strong liquidity and trading interest.
Overall, investors are closely watching Nvidia’s first-quarter earnings report, which could have a significant impact on the stock market. Bank of America’s recommendation to hedge with Nvidia options is seen as a more effective strategy for protecting against the potential market fluctuations that could result from Nvidia’s performance. This approach allows investors to mitigate risk while capitalizing on the opportunities presented by Nvidia’s earnings report.
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https://ca.finance.yahoo.com/news/bank-america-details-best-hedge-014527163.html
