NVIDIA Call Volatility Plunges to 1-Year Low as Nasdaq Valuations Compress
Nasdaq 100 forward P/E slid to 21.7x—below its 10-year average of 22.8x—and the Nasdaq-S&P 500 forward P/E spread compressed to 2.0x, the tightest since December 2018. NVIDIA’s 1-month 25-delta call implied volatility fell to the 3rd percentile of its one-year range, signaling compressed option premiums.
1. Equity Valuation Reset
U.S. equity valuations have retraced to multi-year lows, with the S&P 500 forward P/E at 19.7x—below its five-year average—and the Nasdaq 100 forward P/E at 21.7x, undercutting its decade-long mean of 22.8x.
2. Forward P/E Spread Narrows
The forward P/E spread between the Nasdaq 100 and S&P 500 tightened to roughly 2.0x, marking its narrowest gap since December 2018 and placing it in the bottom quintile of the past ten years.
3. Compressed Option Volatility in Tech
Option volatility remains elevated overall but shows signs of compression: NVIDIA’s one-month 25-delta call implied volatility dropped to the 3rd percentile of its one-year range, while other large-cap tech names also sit near yearly lows.