Unusual Options Activity: Nvidia (NVDA)

Shares of graphics processing manufacturer Nvidia (NVDA) have been a top stock to own over the past several years, but shares are still down with other tech plays in the past few months. One trader sees the potential for a rebound underway.

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  • That’s based on the April 8 $240 calls. With 21 days left until expiration, 10,785 contracts traded compared to an open interest of 327, for a 33-fold increase in volume. The buyer of the calls paid $16.15 to enter the trade.

    Nvidia shares recently traded around $245, making these options about $5 in-the-money. With a 52-week high of $346, shares are still down about 30 percent from where the option trades. Even with the recent drop, shares are still up 72 percent over the past year.

    Revenue rose 53 percent, earnings more than doubled by 106 percent, and the company sports a 36 percent profit margin, showing its strength in the tech space.

    Action to take: Shares are a worthwhile buy on any large enough pullback, and a 30 percent drop from all-time highs looks like a decent entry point. The stock does offer a dividend, albeit a very low one just under 0.1 percent. This is a name to buy for long-term price appreciation potential.

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  • For traders, the April calls look attractive. With only 3 weeks on the trade, it helps that it’s already slightly in-the-money. Traders can likely nab mid-double-digit gains in the next few weeks, and should look to take profits early.


    Disclosure: The author of this article has a position in the company mentioned here, and may further trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.


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