(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Nvidia Corp. (NVDA) shares are surging to another all-time high, just over $170 a share. The stock is now up by over 190 percent in past 52 weeks, with the path of least resistance appearing to be higher, and the stock well on its way to $200. Nvidia is one of the best performers in the market and is crushing the S&P 500 over the same period. 

NVDA Chart

NVDA data by YCharts


There is only one thing potentially standing in Nvidia's way in the immediate future, and that's its earning report, which comes out on August 10 after the close of trading. Analysts are estimating that fiscal second-quarter 2018 EPS rose by nearly 53 percent to $0.81, while revenue grew by 37 percent to $1.962 billion. Those are big growth numbers for a stock that trades at a valuation to fit, at 41 times 2018 earnings estimates. 


Open option interest has been the largest around the $165 to $170 strike prices for expiration on August 11, with investor betting taking place mostly near the stock's current price. But that isn't stopping someone today from betting that Nvidia shares could rise to $200 by the end of the week, with nearly 3,500 contracts traded at the $200 strike price for roughly $0.50 per contract and a notional value of $175,000.

That's not a large bet from a dollar standpoint, but with an implied volatility of 75 percent, it is certainly not cheap. The flip side is that it could be a seller of the calls looking to take advantage of the large premium due to the elevated implied volatility. However, there appears to be significantly more call open interest in the stock than put open interest. 

(Chart Provided By Interactive Brokers)

Hourly Chart

Technically, Nvidia's stock chart has broken higher and appears to have cleared its last layer of resistance around the $169 level. Investors seem to be increasingly bullish on Nvidia. In the hourly chart, there has been a perfectly-formed ascending triangle, and the stock has now broken higher above the resistance. 

(Chart Provided By Interactive Brokers)

With a stock that appears to be well on its way to $200 going into an event like earnings suggests that investors have very high expectations and are looking for Nvidia to easily top estimates on both the top and bottom. Investors will also likely expect strong forward-looking guidance. A marginal beat or in-line guide will not be enough for Nvidia shares to push higher. (See also: Nvidia's Way to Win AI Chip Share: Give Them Away.)

The bets are being laid, and the market is having its say as to which way Nvidia shares are headed. And as of right now, that direction is up. 

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.