Nvidia has been the biggest story of Wall Street's rally to record highs, but the options market appears to be underestimating the impact of its earnings report Wednesday, according to Goldman Sachs. John Marshall of Goldman's derivatives research team said in a note to clients Wednesday that options trades for the broader market are curiously cheap given the looming report from the chip giant, even though the implied move for the stock is nearly 12%.
2% on the 1-day of the past 4 NVDA earnings reports," Marshall said in the note to clients, referencing options on the S & P 500 . The S & P 500 is a market cap-weighted index, meaning that Nvidia has taken on extra importance over the past two years. Nvidia now has a market cap of $2.3 trillion, making it the third largest stock in the index. The options market has underpriced S & P 500 moves following the previous four Nvidia reports as well, according to Goldman.