Nvidia reports earnings on Wednesday. How investors will react to what’s likely to be another blockbuster quarter is anyone’s guess, but don’t be surprised if we see some volatility.
If you’re a trader looking for volatility, Nvidia is usually the place to be. After losing more than $1 trillion in market capitalisation during the recent correction, it rallied over 40 per cent from the intraday low of August 5th.
A trillion lost, $750 billion gained – the dramatic fluctuations are so routine that these astonishing gains and losses barely raise an eyebrow any more.
For some risk-loving souls, even this volatility isn’t enough. Traders have been piling into double-leveraged ETFs designed to provide twice Nvidia’s daily performance. One such ETF recently lost some 60 per cent of its value in just three weeks, before more than doubling over the following fortnight.
There are other leveraged single-stock ETFs for companies such as Apple, Tesla, Alphabet, and Meta, but none have seen anything like the inflows seen in the Nvidia version. Ritholtz Wealth Management’s Michael Batnick notes that assets in the most popular leveraged Nvidia ETF recently went from $5.7 billion down to $3.4 billion before going back up to an all-time high of $6 billion.
Indeed, there’s even a triple-leveraged Nvidia product available on the London market, which is up – wait for it – 770 per cent this year.
Is this kind of trading wise? No. Is it popular? Yes. Clearly, there is a big, big appetite for all things Nvidia.
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