China Headlines Fuel A Fresh Rally
Nvidia’s upcoming earnings report has become one of the most important events for the stock market, as renewed hopes of a US-China trade opening have intensified investor interest in the chip giant. Reports that Washington cleared several Chinese firms to buy Nvidia’s H200 processors have revived expectations that sales to China could support another leg of growth.
The stock has surged 20% since May 5, including a 4.4% rally on Thursday. Nvidia’s market capitalization is now just below 5.7 trillion dollars, up from 4.7 trillion dollars at the close last Tuesday, reinforcing its status as the largest company in the world.
Options Traders Are Already In The Money
The rapid rise in Nvidia’s share price has created major movement in the options market. Many bullish traders who bought call options ahead of earnings are already in the money, meaning the stock is trading above their strike prices.
That has increased leverage going into Friday’s options expiration and next week’s earnings event. Around 40 billion dollars of options delta is trading against only about 4 billion dollars of total premium, showing how sensitive positioning has become to even small moves in the stock.
Friday Expiration Adds Short-Term Pressure
The ten most popular Nvidia options contracts by volume all expire Friday. The 235-strike call is the largest, accounting for 114 million dollars in options premium and nearly 5 billion dollars in delta.
Those traders need Nvidia to hold most of this week’s gains through the closing bell or risk a rapid decline in the value of those contracts. The setup adds a technical layer to the stock’s movement, beyond the fundamental debate over earnings, China access and AI demand.
China Reopening Becomes The Central Question
Brent Kochuba, founder of SpotGamma, said investors are trying to reprice the possibility of China reopening to Nvidia. The logic is simple: if Nvidia can sell more advanced AI chips into China, revenue expectations may need to move higher.
The H200 processor is used for artificial intelligence applications, making it a strategically important product in the global AI race. Any easing of restrictions on Chinese buyers would be closely watched by investors, competitors and policymakers.
Earnings Could Trigger A Larger Move
Nvidia reports earnings after the market close on Wednesday, May 20. Traders are positioning for a significant move, with implied volatility around the event just below 7.5%.
That expected move is more than double the median post-earnings move seen over the past four quarters. The elevated pricing shows that markets expect Nvidia’s results and guidance to either validate the recent rally or trigger a sharp reassessment.
Investors Watch The 250-Strike Call
The most popular options contract by volume expiring next Friday is the May 22 250-strike call, which trades around 4 dollars. For that contract to deliver meaningful upside, Nvidia would need a move close to what the options market is already pricing.
For investors, Nvidia’s earnings are no longer just a company event. They are a test of AI demand, China policy, market positioning and the sustainability of the broader technology rally. With the stock already up sharply, the company may need more than strong results to satisfy expectations that have risen rapidly in both equity and options markets.
