Bulls score big in $NVDA

Option traders scored big gains on upside positions in Nvidia (NVDA) today.

On Aug. 21, our Unusual Activity Service detected the purchase of 5,000 December $155 calls, expiring today, for $26.50 as part of a bullish roll with shares at $173.24. This was clearly fresh buying, as open interest in the strike was only 828 contracts before that session began.

Those calls are marked at $84.55 this afternoon, more than 3 times their purchase price. The stock rallied 38.39% in the same time period, a huge move but nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

NVDA is up 1.82% to $239.74 currently. The graphics-chip maker was named the top Semi idea into 2020 by Wells Fargo earlier this morning, which also raised its price target on the shares to $270 from $240.