NEW YORK (Reuters) -Traders in the options markets are bracing for industry-wide volatility when AI-chipmaker Nvidia ( NVDA ) reports results on Wednesday, with defensive options contracts on a major semiconductor ETF drawing heavy trading.

For VanEck Semiconductor ETF ( SMH ), the largest semiconductors ETF with some $22 billion in assets, about 2.4 put options changed hands daily over the last 10 days against every call option traded, the most defensive the trading has been in about 10 months, according to Trade Alert data.

Call options convey the right to buy shares at a fixed price in the future while put contracts offer the right to sell the shares at a given price.

"The put buying in SMH ahead of Nvidia's ( NVDA ) earnings reflects growing concern about potential volatility for the entire sector following the report," said Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group.

On Tuesday, some 105,000 put options changed hands against about 16,000 call options, by 3 p.m. ET (1900 GMT), Trade Alert data showed.

In one notable trade, one investor last week bought 50,000 put options in SMH that would guard against the ETF's shares slipping about 10%, to below $220, by the end of May.

Nvidia ( NVDA ) accounts for about a fifth of the semi ETF's assets but due to its dominance in the artificial intelligence market, the chipmaker's influence goes beyond its weight in the fund, analysts said.

While investors have been focused on defensive plays in the SMH ETF, options action on Nvidia ( NVDA ) itself was more mixed, Murphy said.

Murphy said investors were selling options to take advantage of heightened volatility expectations around the chipmaker's earnings, meaning they were betting the reaction to the chipmaker's results will not be overly severe.

"It's been hedging in SMH while in NVDA they're tactically monetizing elevated premiums ahead of earnings," he said. Susquehanna makes markets in the securities of Nvidia ( NVDA ).

Interactive Brokers' list of the 25 most active securities by client orders showed Nvidia ( NVDA ) ranked second, underlining the heightened investor interest in the results. Still, the stock was only one of two names for which investors were net sellers.

"That likely reflects some caution ahead of earnings after a solid run," Steve Sosnick, Interactive Brokers' chief strategist, said in a note. Nvidia ( NVDA ) will be the last of the "Magnificent Seven" megacap tech and growth companies to report results for this period. Their stocks have been mixed in 2025 after leading the market higher as a group in the last two years.

For the year, Nvidia ( NVDA ) shares are up about 0.7%, while SMH shares are up about 1.2%.