Tony Zhang's Options Strategy For NVIDIA

On CNBC's "Options Action," Tony Zhang suggested that investors should consider a bullish options strategy in NVIDIA Corporation NVDA ahead of earnings, scheduled for February 24.

He sees significant upside potential for the stock as it started breaking out on the upside last week. The price of Bitcoin could have a positive impact on demand for NVIDIA's GPU chips, and Zhang also sees some potential in its cloud computing segment.

Zhang wants to exploit elevated implied volatility in NVIDIA and sell the March $590/$550 put spread for a net credit of $15.55. The trade starts to lose money below $574.45, and it can make a maximal loss of $24.45. Zhang decided to use this strategy because he wants to make money even if the stock retests its support level, instead of trading higher.