Fast profits for option bulls in $NVDA

Bullish option traders are racking up fast profits today in Nvidia (NVDA).

On May 20, Market Rebellion’s Unusual Activity Service found that 11,600 May $580 calls, expiring today, were bought for $3.36 to $6.05 with shares at $571.62. This was clearly fresh buying, as open interest in the strike was just 9,786 contracts before the activity appeared.

Those calls traded for as much as $28.39 today, at least 4 times their purchase prices. The stock rose 6.17% at the same time, underscoring how quickly options can far outperform their underlying shares.

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 was last at $605.52, up 3.6% on the day after announcing a four-for-one stock split.