Bulls score fast profits in $NVDA

Bullish New Year’s Eve option traders scored fast profits on upside positions in Nvidia (NVDA) today.

On Dec. 31, Market Rebellion’s Unusual Activity Service detected the purchase of 2,150 Weekly $235 calls, expiring tomorrow, for $1.01 to $2.90 with shares at $230.52. This was clearly fresh buying, as open interest in the strike was only 1,821 contracts before that session began.

Those calls have so far traded for as much as $4.70 today, more than double their average purchase price. The stock rallied 3.83% in the same time period, a large 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 1.43% to $238.66 currently. The graphics-chip maker’s price target was raised to $275 from $240 at Benchmark on Tuesday.