Nvidia shares are doing something out of the ordinary this quarter

Nvidia shares have had an unusually good year, rising 32 percent versus an 8 percent gain in the semi-tracking SMH ETF. It's the second-best performing chip stock in the S&P 500 this year, behind AMD.

Ahead of the Nvidia quarterly earnings on Thursday afternoon, options traders are predicting some unusual behavior.

Stacey Gilbert, head of derivative strategy at Susquehanna, told CNBC's "Trading Nation" on Monday what to expect. Here's what she said.

· Nvidia is a stock that's had a magnificent run over the last two years, up over 300 percent versus the SMH's gain of about 64 percent. The stock is far outpacing the broader market, too; the S&P is only up 30 percent in the period.

· Heading into earnings, the market is suggesting relatively little risk this quarter. The implied stock move is around 6 percent in either direction. This is an unusual sign.

· Such a move is a touch lower than the stock's performance during the last eight quarters, which is closer to 9 percent on earnings. It's more in line with what we've seen over the last four quarters, which is around 5 percent.

· Notably, the actual volatility being priced in is one of the lower levels the options market has seen in the last two years.

Wall Street analysts are expecting average earnings of $1.66 per share, according to FactSet estimates. The stock closed modestly higher on Monday, at $256.12 per share.

Bottom line: Nvidia is far outpacing the rest of the semiconductor space this year, and the options market is pricing in little risk for the stock ahead of earnings.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Videos

Trades to Watch

Trader Bios

About

Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

Read more

Connect