Traders post fast gains in $NVDA

A large upside play on Nvidia yielded significant gains thanks to strong earnings and guidance.

On Tuesday, Investitute’s market scanners identified the purchase of 10,000 March $230 calls for $12.50 as part of a bullish spread with shares at $224. This was clearly a new position, as volume was well above open interest of 5,240 contracts.

Those calls traded for $17.70 today, a gain of more than 40%. The stock rose less than 6% in the same time, reflecting the kind of leverage that can be achieved through options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

NVDA jumped 6.69% to $232.08 yesterday. The graphics-chip maker topped quarterly results and raised its outlook after the market closed Thursday.