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Nvidia attracts bulls for second day

David Russell (david.russell@optionmonster.com)

Nvidia has been holding support around $12, and now the bulls are looking for the graphics-chip maker to rally.

optionMONSTER's Heat Seeker system detected unusual activity in the semiconductor stock on Thursday and Friday. First they bought the June 12 calls for $1.11, then they came back the next day to snap up the September 13 calls for $1.05 and $1.06. Volume exceeded open interest both sessions, indicating that new money was put to work.

These long calls , which lock in the price where the stock can be purchased, can generate major leverage in the event of a rally. But they also have the potential to become worthless if the stock doesn't move. (See our Education section)

NVDA rose 1.8 percent to $12.41 on Friday. The stock has bounced near the $12 area several times in the last 18 months, which could be leading some traders to think that it's due for another rebound. The last earnings report in November was mixed, with earnings and revenue better than expected but guidance below consensus estimates.

Total option volume was more than quadruple average amounts on Thursday and Friday. Calls accounted for more than 80 of the activity in both sessions.

(A version of this post appeared on InsideOptions Pro on Friday.)

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