$NVDA bulls cash in their chips

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

On Jun. 22, Market Rebellion’s Unusual Activity Service flagged the purchase of 2,100 September $380 calls for $34.90 to $36.20 with shares at $377.80. 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 $174.50 so far today, at least 4.5 times their purchase prices. The stock rose 64.02% 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 is up 3.35% to $552.72 this afternoon. Wells Fargo raised its price target for the stock to $605 from $535 today as the graphics-chip maker unveiled its GeForce RTX 30 Series GPUs.