Nvidia fell after hitting a new intraday high, with bullish options being actively purchased ahead of the earnings report.

Part of the options traders are betting heavily that Nvidia's stock price will continue to rise after the release of its earnings report on Wednesday, following the brilliant performance of the previous quarter.

On Monday of this week, some of the most active contracts were betting that Nvidia's stock price could continue to climb, reaching $500, which would be profitable for these contracts. Some traders even bet on call options with exercise prices of $600 or $700. The most popular Nvidia options are those expiring in a few days, indicating that traders are seeking quick profits.

Among the top 10 companies in terms of market capitalization in the S&P 500 index, Nvidia is the only one with call option prices higher than put option prices, highlighting people's rush to buy call options for fear of missing out on further gains. People still expect it to rise rather than worrying about a decline and taking protective measures.

Currently, Nvidia options are extremely active. Cboe data shows that the number of outstanding call option contracts for August has reached a new high. Nomura Securities previously stated that interest in end-of-term options betting has surged this year, with trading volume reaching a historical high this month.

Option pricing also shows that traders are betting on Nvidia's stock to fluctuate by about 11% up or down by the end of this week after the release of its earnings report, which is much higher than the average volatility of about 7% after the previous eight Nvidia earnings reports. High volatility can allow some traders to profit from it.

Nvidia's earnings report three months ago shocked the market, with AI chip demand far exceeding expectations, causing the stock price to surge 30% after hours, approaching a trillion-dollar market capitalization. On the normal trading day following the earnings report, Nvidia reached a high of $394 and closed at $379, resulting in a one-day increase in market capitalization of $184 billion.

On Monday, after several days of adjustment, Nvidia's stock price rose by 8.5%. The upward trend continued in early trading on Tuesday, reaching a new intraday high of $481, surpassing the high point of July 14th this year, but ultimately fell by nearly 2.8% to close at $456.

An article on the Wall Street Caijing website mentioned that the average target price for Nvidia given by Wall Street institutions has been continuously rising, currently exceeding $520, about 3% higher than a week ago when it was $505. A target price of $520 means that analysts expect Nvidia's stock price to rise by 14% from Tuesday's closing price of $456. FactSet data shows that some analysts have even raised their target price for Nvidia to $1000.

As Nvidia accounts for nearly 3.1% of the S&P 500 index, the trend of its stock will have a wide-ranging impact on the entire market, highlighting the importance of this earnings report. Nvidia's earnings report is also a test of the market's current enthusiasm for the field of artificial intelligence. This year, ChatGPT has ignited the market's frenzy for AI technology and is one of the core logics behind the rise of US stocks.

According to data from Cboe Global Markets, as of mid-August, investors have invested over $100 billion in Nvidia options this year, with about 60% of them related to call options, betting that the stock price will continue to rise. Apart from Tesla, no other company in the history of the US stock market has attracted such a high level of investor interest. This has reminded market veterans of the frenzy surrounding Tesla's followers. Many people have tried to profit from Tesla options, and lucky ones can make ten times a day. Tesla options have become one of the biggest casinos in the financial market, and from the latest developments, this gambling has spread to Nvidia.