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Traders looking for Nvidia breakout

David Russell (david.russell@optionmonster.com)

Traders are positioning for a breakout in graphics-chip maker Nvidia.

optionMONSTER's Heat Seeker monitoring program detected the purchase of 5,300 December 17 calls for $0.17 and the sale of an equal number of December 18 calls for $0.04. Volume was more than twice open interest at both strikes, indicating that new money was put to work on the long side.

Known as a bullish call spread , the trade cost $0.13 to open and will earn profit of 669 percent on a move to $18. (See our Education section for more on how to generate leverage with options.)

NVDA is down 0.74 percent to $16.10 in morning trading, hovering near the top of a range that's provided resistance for more than two years. Today's upside option trades reflect a belief that it will break out and keep going.

Total option volume is slightly above average in the name, according to the Heat Seeker. Puts outnumber calls by almost 8 to 1.

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