Nvidia Earnings Report May Spark Implied Volatility Surge

Stocks closed higher yesterday but not by much, with the trading range tight. The VIX 1-day finished below 9, and it's likely this won't stay that way for long, especially with Nvidia's earnings report tomorrow night.

The Cboe Volatility Index (VIX) 1-day is expected to be much higher by Wednesday's close, as implied volatility may rise sharply. Since 2022, the VIX 1-day has rarely closed at such low levels, so the range of implied volatility is likely to expand from here.

Implied volatility for the semiconductor sector continues to decline, with the VXSMH dropping to 38.9, its lowest level since August 14 and January. This is a significant decrease, as it has nearly been cut in half in six weeks.