Calls buyers score again in $NVDA

Bullish option traders are racking up large profits today in Nvidia (NVDA) for the second time this month.

On Sep. 8, Market Rebellion’s Unusual Activity Service flagged the purchase of 3,000 Weekly $510 calls expiring on Friday, Sep. 11, for $3.44 to $8.22 with shares at $486.53. This represented fresh buying, as open interest in the strike was 980 contracts before the trades appeared.

Those calls have traded for as much as $16.14 so far today, at least 2.5 times their average purchase price. The stock rose 7.39% at the same time, underscoring how quickly options can far outperform their underlying shares.

It is the second winning trade in the name to be posted on Market Rebellion this month.

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 traded up to as high as $522.61 this morning but has pulled back with the rest of the market, last lower on the session by 4.14% to $487.56. Credit Suisse raised its price target for the stock to $620 from $530 yesterday morning.