Derivatives
Phantom Traders Show 88.7% Long Positions in Nvidia Ahead of Earnings Report
Recent data from Phantom, a trading platform that allows users to trade perpetual futures on synthetic equity contracts, shows that a significant 88.7% of traders holding NVDA positions are long as Nvidia prepares for its upcoming earnings report. This bullish sentiment is consistent, with a similar figure of 89.3% reported in late June.
Phantom operates on a model where users trade price exposure rather than owning actual Nvidia shares, utilizing up to 10x leverage. This means that a small movement in Nvidia’s stock price can lead to substantial gains or losses for traders. However, this high leverage also raises concerns about potential liquidation cascades if Nvidia's earnings disappoint, as automated sell-offs could exacerbate price declines.
Additionally, Phantom's continuous trading model allows for real-time market access, which contrasts with traditional market hours. This dynamic could lead to heightened volatility, particularly if earnings results are released after traditional trading hours.
New Insights on Nvidia's Capital Deployment
On August 25, Sara Araghi, a portfolio manager at Franklin Equity, emphasized the need for Nvidia to clarify its capital deployment plans ahead of its fiscal Q2 2027 earnings report, scheduled for August 26. She highlighted that simply meeting growth numbers is no longer sufficient for investor confidence.
Currently, Nvidia's forward price-to-earnings ratio is approximately 21x for the next 12 months, which is considered modest given its recent revenue growth in the semiconductor sector.
Araghi pointed out that Nvidia's recent partnerships with BlackRock and Goldman Sachs aim to raise over $500 billion to finance AI computing infrastructure, marking a significant strategic shift for the company. This move allows Nvidia to support financing structures while mitigating the burden on its own balance sheet.
She noted that the demand for AI compute is still in its early stages, aligning with broader estimates of enterprise AI adoption progress.
FAQ
What percentage of traders are long on Nvidia according to Phantom's data?
According to Phantom's data, 88.7% of traders holding NVDA positions are long as Nvidia prepares for its upcoming earnings report.
How does Phantom's trading model differ from traditional stock trading?
Phantom operates on a model where users trade price exposure on synthetic equity contracts rather than owning actual shares, allowing for up to 10x leverage.
What are the risks associated with high leverage trading on Phantom?
High leverage trading can lead to substantial gains or losses, and there is a risk of liquidation cascades if the underlying stock's price moves unfavorably.
How does Phantom's continuous trading model affect market volatility?
Phantom's continuous trading model allows for real-time market access, which can lead to heightened volatility, especially if earnings results are released after traditional trading hours.
What was the long position percentage for Nvidia traders reported in late June?
In late June, a similar figure of 89.3% of traders holding NVDA positions were reported to be long.