Options traders bet Nvidia can keep the chips ripping when it reports earnings

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Nvidia reports earnings after the bell on Wednesday. The stock is already up more than 100% this year, and options traders are betting on more gains.

[by a ratio of] about 2 times to 1. That's nothing new, we've seen that trend over the last 20 or so trading days. Taking a look at the at-the-money options out until Friday expiry, we can see that the options are implying just south of a 7% move [in either direction] between now and then," XP Investments managing director Bonawyn Eison said Tuesday on CNBC's "Fast Money.

"The trade that sticks out to me, about 10,000 of the August expiry 500-calls traded [for] around $12, putting your breakeven around $512," said Eison. Those were Tuesday's most active contracts, and allow buyers of those calls to play for an upside move of at least 5% while risking only about 2.5% of the current stock price, as opposed to buying the stock outright and facing potentially much larger losses if Nvidia were to disappoint after the bell on Wednesday.

 

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