Options Brief – Nvidia Beats, KOSPI Surges – 21 May 2026
By Koen Hoorelbeke, Investment and Options Strategist
Summary
The options market anticipated a significant $355 billion swing in Nvidia's stock price ahead of its earnings report. Nvidia's results exceeded expectations across the board, with revenue of $81.6 billion and earnings per share (EPS) of $1.87, surpassing consensus estimates of $78 billion and $1.76, respectively. However, despite these strong results, Nvidia's stock price declined in after-hours trading, highlighting the importance for options traders to understand the gap between market pricing and actual performance.
Market Overview
On the same day, US equities ended a three-day losing streak, buoyed by easing Treasury yield pressures due to de-escalation signals between the US and Iran. The S&P 500 rose by 1.08% to 7,432.97, the Nasdaq 100 increased by 1.66% to 29,297.70, and the Russell 2000 outperformed with a 2.56% gain. Notably, South Korea's KOSPI index surged by 8.11% to 7,793.72, primarily driven by gains in Samsung Electronics and SK Hynix, which are key suppliers of high-bandwidth memory chips essential for Nvidia's AI infrastructure.
Options Market Insights
The VIX index closed at 17.44, indicating a low-fear environment, while the one-day VIX (VIX1D) spiked by 21.88% to 16.21 ahead of Nvidia's earnings release. This spike is expected to collapse following the earnings report, leading to a significant decrease in implied volatility. The CBOE S&P 500 put/call ratio fell to 1.00, indicating a shift towards bullish sentiment as investors moved into call options. The elevated call volumes suggest that market makers are positioned for potential volatility in the coming sessions.
Strategic Insights
Nvidia's IV Crush
The options market had priced in a 6.5% post-earnings move for Nvidia, reflecting a potential $355 billion market cap swing. Despite the strong earnings report, the stock's decline post-earnings exemplifies the concept of implied volatility (IV) crush, where the premium paid for options can outweigh the actual stock movement. This serves as a cautionary tale for traders holding long options positions ahead of earnings.
KOSPI Rally and Samsung Strike
The KOSPI's significant rise is closely linked to Nvidia's demand for AI chips, but a labor strike involving 45,000 Samsung workers introduces potential supply-side risks that could impact future performance. Traders are advised to consider put spreads for downside protection, as the current market conditions suggest that puts are relatively expensive compared to calls.
Conclusion
The day's trading activity indicates that investors reacted positively to Nvidia's earnings, but the subsequent stock decline serves as a reminder of the difference between market expectations and actual results. Moving forward, the collapse of the VIX1D and shifts in put/call ratios will be critical to watch, alongside the implications of the Samsung strike and any analyst revisions following Nvidia's earnings.