Nvidia bulls rake in fast money

Traders turned big profits today after Nvidia’s quarterly results.

On April 25, Investitute’s scanners found that 3,300 May $112 calls were purchased for $1.91 as part of a vertical spread with shares at $104.92. Open interest in the strike was only 202 contracts before the trade occurred, showing that it was a new position.

Today those calls traded for as much as $10.05, yielding a profit of more than 425 percent. The stock advanced 16 percent in that time frame, underscoring how options can dramatically 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 surged 17.83 percent to $121.29 today. The graphics-chip maker topped earnings and revenue estimates after the close yesterday.

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