$NVDA bulls triple money in hours

Option traders who opened bullish positions in Nvidia this morning were reaping large profits by the afternoon.

Less than an hour after the opening bell, Investitute’s market scanners found that 3,300 Weekly $148 calls expiring on Jan. 11 were purchased for $0.80 to $1.54 with shares at $140.48. This was clearly fresh buying, as open interest in the strike was only 373 contracts before the activity appeared. Investitute co-founder Jon Najarian cited the unusual activity shortly afterward on CNBC’s “Halftime Report.”

Those calls traded up to $2.98 by early afternoon, more than 3.5 times their initial purchase price. The stock rose 3.1% at the same time, showing how quickly options can far outpace gains in 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 jumped 5.29% to $143.40 today. The graphics-chip maker has been hammered along with other semiconductor names and the tech sector in general in recent months.