U.S. options market data indicates that options traders anticipate NVIDIA's market capitalization could experience approximately $260 billion in volatility following the chip manufacturer's latest quarterly earnings release scheduled for Wednesday after market close Eastern Time (early Thursday morning Beijing Time).

The data reveals that NVIDIA options are pricing in potential bidirectional stock price movements of around 6% (either up or down) following the earnings announcement. This implied volatility level falls below the 7% long-term average fluctuation, suggesting that as NVIDIA continues to mature, investors may now have clearer expectations regarding its performance.

Chris Murphy, co-head of derivatives strategy at market maker Susquehanna, commented: "The ripple effects from NVIDIA's earnings may be more noteworthy than the actual volatility in its own share price. Many speculative AI-related stocks that previously saw remarkable gains have declined significantly, but NVIDIA's stock price has essentially returned to near its historical highs."

Murphy noted that if NVIDIA's performance exceeds expectations, it would "provide support for those harder-hit, more speculative areas within AI trading."

According to ORATS data, over the past 12 quarters, NVIDIA's average implied volatility before earnings releases was 7.7%, while the actual average volatility was close to 7.6%.

This year, NVIDIA's substantial stock price gains have driven market advances, though enthusiasm for technology stocks has cooled this month, with the tech sector experiencing modest pullbacks.

Traders are currently closely monitoring NVIDIA's earnings report to assess whether its $4 trillion market capitalization is justified. Additionally, the company's recent revenue-sharing agreement with the U.S. government, which could impact performance expectations, will be under particular scrutiny.

As a semiconductor giant at the core of the AI sector, NVIDIA shares have risen approximately 34% year-to-date, closing Monday at $179.81, up 1.02%. The S&P 500 index declined 0.43% that day, closing at 6,439.32 points, with a cumulative gain of 9.5% for the year.

Matt Amberson, founder of ORATS, stated: "NVIDIA's stock performance has been remarkable, and this is currently a 'Goldilocks moment' for the company," referring to an ideal, just-right situation.