Nvidia’s run has been so remarkable that the market now believes the company is worth more than $100 million per employee....
"…For Nvidia, after this latest run-up took it north of the $3T milestone, the company is being valued at more than $100M for each of its 29,600 employees (per its filing that counted up to the end of Jan 2024).
That’s more than 5x any of its big tech peers, and hundreds of times higher than more labor-intensive companies like Walmart and Amazon. It is worth noting that Nvidia has very likely done some hiring since the end of January — I think the company might be in growth mode — but even if the HR department has been working non-stop, Nvidia will still be a major outlier on this simple measure.
We are running out of ways to describe Nvidia’s recent run… but a nine-figure valuation per employee is a new one."
Stock movement is always speculative with or without options. The difference that derivatives makes is the ability to price in speculative value at some point in the future as well. The price of a share is reflective of what traders think a company is worth today; but an option is a reflection of what traders think the shares will be worth at some point in the future, which people can then look at and use to re-adjust their estimation of what they think the underlying share price is worth today. It’s a recursive feedback loop that (theoretically) results in share prices closer approximating a true value. A sort of predictive smoothing function.
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With options trading, a lot of stock movement is reflective of speculation rather than true value.
Stock movement is always speculative with or without options. The difference that derivatives makes is the ability to price in speculative value at some point in the future as well. The price of a share is reflective of what traders think a company is worth today; but an option is a reflection of what traders think the shares will be worth at some point in the future, which people can then look at and use to re-adjust their estimation of what they think the underlying share price is worth today. It’s a recursive feedback loop that (theoretically) results in share prices closer approximating a true value. A sort of predictive smoothing function.