Before companies announce their financial results, investors do not yet know the actual figures. Even so, markets can provide an estimate of the size of the move a stock may make once the results are released.

This idea is especially clear ahead of Nvidia’s earnings release, with the options market pricing in an expected move of around 5.4% up or down in the company’s stock. Because of its enormous market capitalization, a move of this magnitude would translate into a change of roughly $280 billion in its market value.

But how can the market anticipate the size of the move without knowing whether the stock will rise or fall?

What Does the Options Market Tell Us?

An option is a financial contract that gives an investor the right to buy or sell a stock at a specified price during a certain period.

The price of this contract is affected by several factors, one of the most important being the expected degree of future volatility in the stock price, known as implied volatility.

As an important event such as an earnings announcement approaches, uncertainty increases around the price the stock may reach after the announcement. This concern appears in higher options prices.

From the prices of these contracts, it is possible to derive an approximate range for the move the market expects.

Therefore, when markets say they expect Nvidia to move by around 5.4%, this does not mean they expect the stock to rise by that percentage. Rather, it means they see a move of this size—either up or down—as likely after the results are released.

Why Aren’t Strong Results Enough to Lift a Stock?

A company may report a large increase in revenue and earnings, yet its stock may still decline.

The reason is that the market does not compare results only with the past; it compares them with what had already been expected.

If investors expected, for example, revenue of $92 billion and the company reported $93 billion, the result may appear historically strong, but it would not represent a major surprise compared with market expectations.

If the company reported $100 billion, however, the surprise could be much greater.

That is why the stock price typically moves based on the difference between:

Actual result – the result the market had already priced in.

The higher expectations are, the more difficult the company’s task becomes: it must not only deliver strong growth but also exceed an already elevated level of optimism.

What Does a 5.4% Move Mean for a Company the Size of Nvidia?

The percentage alone may appear modest.

But when applied to one of the world’s largest publicly listed companies, the move becomes enormous in absolute terms.

The expected move is equivalent to roughly $280 billion in market capitalization, an amount greater than the market value of most companies individually listed in the S&P 500.

This highlights the importance of distinguishing between percentage and value.

A 5% move in a small company may represent hundreds of millions of dollars, while the same move in a giant company may represent a change of hundreds of billions.

That is why a company’s market capitalization means that even moderate percentage moves can have a significant impact on indexes and investment portfolios.

Why Has the Expected Move Become Smaller Than Before?

Nvidia’s stock has moved an average of around 7.4% after earnings over the past 12 quarters, while the options market was expecting around 5.4% this time.

This can be explained from an important perspective: the more mature market expectations become, the less room there is for surprise.

In the early stages of the artificial intelligence boom, it was difficult for investors to estimate demand for the company’s chips. As a result, earnings sometimes exceeded expectations by wide margins, sending the stock up or down by double-digit percentages during some periods.

After several quarters of strong growth, analysts now have more information about demand, technology companies’ budgets, and data-center projects.

In other words, the market has become better able to form its expectations in advance.

This does not mean the company has become less growth-oriented; rather, a larger portion of that growth has become known and priced into the stock before the earnings announcement.

When Expectations Themselves Become a Risk

Analysts expect Nvidia’s revenue to rise to around $92 billion in the second quarter of 2026, with next-quarter sales expected to reach approximately $104 billion, while adjusted gross margins are expected to remain near 75%.

These are strong figures, but they also create a high level of expectations.

The higher the expectations, the less room for error the company has.

Revenue may grow strongly, but if profit margins weaken, or if forward guidance comes in even slightly below what investors expect, the market may quickly reassess the stock.

This explains why stocks do not move based on the question: Are the results good?

Instead, they move based on a more precise question:

Are the results better or worse than what the current price had already assumed?

What Can We Learn from the 5.4% Figure?

The options market does not know the future, but it aggregates investors’ expectations and concerns, as well as their willingness to pay for protection against price movements.

That is why the 5.4% figure can be viewed as a price for uncertainty rather than a prediction of the stock’s direction.

The more important the event or the harder its outcome is to predict, the higher the cost of options and the volatility priced in by the market generally become.

The figure thus becomes a tool for understanding market sentiment before the event, not a prediction of what will happen afterward.

In financial markets, surprise is not measured by how good the figure is on its own, but by the gap between what actually happened and what investors had expected in advance.