Nvidia is a popular tech stock for options trading right now due to the demands of the market for AI hardware and software, which are the primary products that Nvidia designs and manufactures. Although as of late February 2025, the Nvidia stock (NVDA) is technically not a “buy” due to a few factors that we’ll address later in this guide, NVDA is usually a great stock for buying call options with perks like leveraged profits and limited risk. Most of our guide is dedicated to learning how to buy call options on Nvidia and make a profit.
This guide will walk beginners through the process step by step. We’ll introduce the basic concepts behind trading call options, the tools a trader will need to access the Nvidia stock and its options contracts, and the steps they must take to place their order and then see their trader through to a profit. We’ll even address what to do to mitigate potential risks and the best practices traders must implement to be on the winning side of the curve more often than not.
Understanding Call Options
If you’re unfamiliar with call options, we’ve outlined the basics right here, including what they are, examples of making money with call options, and the key terminology that you should know to understand the basic ideas of trading call options and securing a profit.
What Is a Call Option?
Call options are a financial contract that gives the buyer the right, but not the obligation, to buy a stock at a specific price before the expiration date. Traders buy a call option and pay a price (called the premium) to the seller, and if the asset price goes above the strike price, traders can exercise the option to buy the asset at the strike price. The profit potential is technically unlimited, while the maximum risk is limited to the premium the trader paid to get the position.
Call options can turn a profit for traders when they sell the asset at a higher market price than what they bought it for. The worst-case scenario for traders using call options is the asset price not rising above the strike price and the option expires as worthless, in which case the buyer loses the money they paid to enter the contract (the premium).
Example
A good showcase of how call options work would be a trader who buys an Nvidia call option if they are expecting the stock price to increase. Purchasing the call option at a low price means they can secure a profit if the stock price increases in value. They can enter the trader at a relatively low level and then turn around and sell it off while the stock price is high.
Key Terms to Know
Let’s run through some helpful terminology that all options traders need to know when dealing with call options. This provides some understanding as to how they’re set up as well as how to trade them in a way where you can turn a profit or mitigate losses when the market turns against you.
- Strike Price: Also known as the “exercise price” or the “grant price,” this refers to the fixed price that an option contract can be exercised and it is set when the contract is granted. It doesn’t change until the moment the contract expires. The key thing with the strike price is that it determines the value of the contract as well as the potential for profit or loss.
- Expiration Date: The specific date on which an options contract ceases to exist and therefore becomes invalid. The expiration date is the final day that a trader can either buy or sell the underlying asset at the strike price. Expiration dates play a big role in determining the value of an option contract as the contract loses value the closer it gets to its expiration.
- Premium: The price the buyer pays to buy an options contract. It is the cost of being able to buy or sell the underlying security at a certain strike price and by a certain expiration date. The premium is the encapsulation of the time value and the instinct value of the contract (time value is based on the time to expiration, and intrinsic value is based on the current market price).
- In-the-Money: This refers to options contracts that could be profitable if exercised due to the contract having intrinsic value about the current market price. Call options are in the money if the strike price is lower than the current market price, while put options are in the money if the strike price is higher than the current market price.
- At-the-Money: These refer to options contracts where the strike price is the same as the underlying stock price, which means they have no intrinsic value. Because they’re close to becoming profitable, at-the-money options are actively traded with many traders using them to build spreads and combinations. ATM options have the higher gamma and the tightest bid-ask spreads.
- Out-of-the-Money: The option contracts have no value. Call options that are OTM have an asset price that’s currently below the strike price, and put options have an asset price that’s currently above the strike price.
- Breakeven Point: It’s the price at which the total cost of the trade is completely recovered, the price at which the buyer of an option neither loses nor gains money. The breakeven point can be calculated by taking the premium paid for the contract and comparing it to the strike price set.
Preparing to Buy Your First Nvidia Call Option
Now you’re reading to buy your first Nvidia call option. But where do you begin? The first few steps involved signing up with a trading app that will help you manage your portfolio and then getting a firm understanding of what kind of trader you’d like to be, along with establishing some trading goals. We’ve outlined everything here to give you a rough idea of what kind of prep work is involved before being able to trade Nvidia stock (that is if you’re beginning from ground zero).
Choose a Brokerage Platform
The first initial step is to look for platforms with low fees, good research tools, and options trading capabilities. We’ve added some links to our favorite online trading apps for your convenience. Feel free to read our full reviews to get an idea of which platform might be the best fit for your trading goals, style, and risk tolerance.
The Best Options Trading Apps
Steps to Open and Fund Your Account
These trading apps make it easy for new customers and users to open up a new account and get trading right away. Once you’ve downloaded the mobile app or visited the website, you will proceed to the “Sign Up” or “Create Account” page. You’ll be asked to provide some basic information like your full name, phone number, and email address. You’ll also have to create a unique, strong password.
You might have to provide a form of identification to the platform to show you’re legally old enough to use it, with accepted forms of ID usually being a driver’s license, national ID card, or passport. Once you’ve agreed to the terms and conditions, you can provide the banking account information you’ll be using to fund your account, and you can begin trading Nvidia or any other stocks or options that have caught your eye.
Understand Your Risk Tolerance
Risk tolerance is something important to know about if you’re going to be trading options, due to all options contracts involving some sort of risk. It’s key to invest only as much money as you can afford to lose. But there’s a bit more nuance to risk tolerance. It’s the amount that the trader is willing to take on, so it will be different from one trader to the next.
Risk tolerance can be determined using the following metrics:
- Financial Goals: Traders have to consider their current financial situation. This includes the amount of money that they’re physically able to invest at the current moment.
- Time Horizon: This refers to the amount of time that traders have until they need to use their money, another key consideration of determining risk tolerance for traders.
- Comfort Level: Some people tend to be risk-takers, while others simply don’t have the temperament to go out on a limb all the time. You have to be thinking about whether you’re more conservative or aggressive in your trading approach to get a good gauge of your current risk tolerance. Some traders gain a higher comfort level and are willing to take on bigger risks the more experience they gain in the options market.
- Risk Knowledge: How much the traders know about the market is another primary consideration when it comes to gauging risk tolerance. Those with little market knowledge will generally have a lower tolerance for risk just due to the higher level of unfamiliarity compared with more experienced traders.
Analyzing Nvidia Stock (NVDA)
Nvidia (NVDA) is a US-based company that designs and manufactures GPUs (graphics processing units). They’re a leader in the GPU market as well as a major supplier of hardware and software for AI systems. This multinational corporation and technology company has been getting a lot of attention lately due to a surging demand for graphics processing units and their specialized chips that have become integral to cutting-edge AI applications and their development.
Research Nvidia’s Performance
The overall sentiment when it comes to investing in Nvidia’s stock is positive, at least in terms of the sentiment that is coming from the top investment platforms. Many are expecting the company to drive strong sales into the second half of 2025. There is a lot of talk of Nvidia possibly capturing 44% of the AI server market, so many professional and seasoned traders are seeing big things for the future.
For your convenience, we’ve included the current information on the stock price as it stands at the close of February, but we’ve also broken down its last four quarters to give you an idea of the trends and pricing of the stock back in 2024 and how those numbers compared year over year with 2023.
February 28, 2025
Quarterly Financials (April 2024)
April
- Revenue: 26.04 B
- Net Income: 14.88 B
- Diluted EPS: 0.6
- Net Profit Margin: 57.14%
- Operating Income: 16.91 B
- Net Change in Cash: 307 M
- Cost of Revenue: 5.64 B
Y/Y
- Revenue: 262.12% (Up)
- Net Income: 628.39% (Up)
- Diluted EPS: 650% (Up)
- Net Profit Margin: 101.13% (Up)
- Operating Income: 690.14% (Up)
- Net Change in Cash: 81.83% (Down)
- Cost of Revenue: 121.62% (Up)
Quarterly Financials (July 2024)
July
- Revenue: 30.04 B
- Net Income: 16.6 B
- Diluted EPS: 0.67
- Net Profit Margin: 55.26%
- Operating Income: 18.64 B
- Net Change in Cash: 984 M
- Cost of Revenue: 7.47 B
Y/Y
- Revenue: 122.4% (Up)
- Net Income: 168.24% (Up)
- Diluted EPS: 168% (Up)
- Net Profit Margin: 20.63% (Up)
- Operating Income: 174.15% (Up)
- Net Change in Cash: 22.54% (Up)
- Cost of Revenue: 84.57% (Up)
Quarterly Financials (October 2024)
October
- Revenue: 35.08 B
- Net Income: 19.31 B
- Diluted EPS: 0.78
- Net Profit Margin: 55.04%
- Operating Income: 21.87 B
- Net Change in Cash: 536 M
- Cost of Revenue: 8.93 B
Y/Y
- Revenue: 93.61% (Up)
- Net Income: 108.9% (Up)
- Diluted EPS: 110.81% (Up)
- Net Profit Margin: 7.9% (Up)
- Operating Income: 109.94% (Up)
- Net Change in Cash: 247.66% (Up)
- Cost of Revenue: 89.11% (Up)
Quarterly Financials (January 2025)
January
- Revenue: 39.33 B
- Net Income: 22.09 B
- Diluted EPS: 0.9
- Net Profit Margin: 56.17%
- Operating Income: 24.03 B
- Net Change in Cash: -518 M
- Cost of Revenue: 10.61 B
Y/Y
- Revenue: 77.94% (Up)
- Net Income: 79.82% (Up)
- Diluted EPS: 83.67% (Up)
- Net Profit Margin: 1.06% (Up)
- Operating Income: 76.54% (Up)
- Net Change in Cash: 129.42% (Down)
- Cost of Revenue: 99.7% (Up)
Despite the strong performance last year and into the beginning of 2025, Nvidia stock sank on January 27 when it was reported that Chinese AI lab DeepSeek came close to the performance of American rival companies for only a fraction of the cost. Shares for Nvidia also fell due to rival Broadcom and their strong demand for chips for data center AI networking gear. Despite these upsets in the stock price and the momentum of the Nvidia stock, its earning growth is its strong point, and there are still bullish demands for AI that make Nvidia a stock that traders will want to keep their eyes on.
Identify the Right Strike Price and Expiration Date
On Thursday, February 27, shares plunged by 8% and fell below the 200-day line, which was followed by a reversal that sent the stock higher by the following Friday morning. As of now, Nvidia has to retake the 50-day line before it can be considered a buy again.
Although we’ve talked a great deal about buying call options on Nvidia, right now, we’d recommend selling put options because we still expect the stock price to rebound once more. Selling puts can secure a profit for traders by allowing them to receive a premium from the options buyer for taking on the risk. We’d recommend going with a strike price that’s slightly below the current market price of the stock. Choose an expiration date that is longer, as you’ll collect a higher premium from selling the put, and you have a lesser chance of losing value due to time decay.
Step-by-Step Guide to Buying an Nvidia Call Option
We expect Nvidia to be a call once more after getting out of this current slump, so we’d recommend you check out this step-by-step instruction guide to buying call options with Nvidia on your trading app of choice. If you’re new and wondering where to start, you can follow this rough guide to walk yourself through the process of selecting Nvidia stock options and submitting your order.
1. Log In to Your Brokerage Account
Open your trading app or visit the website. Navigate to the options trading section and look for Nvidia stock.
2. Search for Nvidia (Ticker: NVDA)
Locate Nvidia in the platform’s search bar—you’ll likely be clicking or tapping on a button that says “Search.” Enter the Nvidia ticker name/symbol: “NVDA.” The ticker name should appear in the dropdown menu that comes up under the search bar. Clicking on it will direct you to the profile page of the Nvidia stock.
3. Choose the Call Option You Want to Buy
Use the options chain to find your desired strike price and expiration date. We’d advise setting the strike price slightly above the current market stock price. The expiration date should align with the timeframe that you’d expect the stock price to rise above the strike price to secure a decent profit, but not be close to expiring as worthless.
4. Select the Number of Contracts
One contract of Nvidia stock represents 100 shares. Choose the number of contracts you would like to trade. Choose a quantity that aligns with your risk tolerance and the overall size of your investment. Take the time to think about the possible gain or loss per contract.
5. Enter Your Order Type
Choose between a market order (buy immediately) or a limit order (buy at a specific price). The market order instructs the trading app to buy the Nvidia stock at the current market price where you’ll experience immediate execution. On the other hand, limit orders will let you clarify the maximum price you’re willing to pay for the stock. This ensures that you’ll only trade at that price or better.
6. Review and Submit Your Order
Double-check the details before placing the trade. Once you’re done, simply click or tap on “Place Order” or “Submit” to execute the trade completely.
Something to keep in mind is that this process we’ve outlined is simply to give you a rough idea of how it works—the actual process of submitting orders might differ from one trading app to the next. Remember to have enough funds available in your account to cover all orders and trades you might submit. Be aware of any trading fees or commissions that might be associated with executing your trade.
What Happens After You Buy?
Once you’ve submitted your order for Nvidia call options, your order is sent to the broker, which will try to match it with a corresponding buy order in the market. After your broker or trading app has made a successful match, they will execute the trade, and you will get a confirmation message with the details of the deal. You should own the asset on the next trading day, as these trading apps typically settle securities into traders’ accounts within one business day.
Now, what must you do after buying your Nvidia stock? After all, your goal is to make a profit with this trade, so what are the next steps you must take following the purchase? Keep reading to find out!
Monitor Your Option
The next thing you must do is to actively track the performance of your Nvidia options contract. Monitor the price of the underlying asset and the contract’s value over time. You need to figure out when the best time is to sell the stock option, to either secure a profit, break even, or sell at the lowest price you’re willing to lose.
Traders can use helpful tools like options profit calculators to assess potential gains or losses. Check out some of our favorite profit calculators right here:
- CBOE Options Calculator—This is a free tool that works well for newbies and advanced traders. It includes a trade optimizer and metrics.
- Thinkorswim—Presented by TD Ameritrade, the Thinkorswim options calculator is designed for more advanced options traders. It does a phenomenal job of simulating real-world trades.
- Barchart Options Calculator—A more advanced options calculator, Barchart offers Greeks for US options and uses the Black 76 Pricing model to calculate fair value prices.
- Optionistics—If you’re looking for an options calculator that supports multiple trading strategies, the one offered by Optionistics might be the right choice for you.
- OptionsXpress—Enjoy real-time data to inform your trading approach with this integrated, robust options calculator presented by OptionsXpress.
- Options Profit Calculator—This free tool does a great job of calculating the potential profits of multiple call-and-put option contracts.
- OptionStrat—Save and monitor your trades with this options calculator, which also comes with a great optimizer.
Decide When to Exit
There are two kinds of exits in this scenario where traders can come out stronger on the other end. These are the ideal conditions for getting out of trade with a profit. They include the following:
- Selling the option before expiration to capture profits is the primary goal in options trading. Traders are selling their Nvidia options at a higher price than what they paid for. To set this up successfully, traders need to buy low, anticipating the stock to rise, and then sell when the stock price has risen high enough to the desired profit margin.
- Exercising the option to buy Nvidia shares if profitable means that traders can own a piece of the company, giving them the right to buy shares of the company’s stock at a fixed price defined in their option grant.
However, there are scenarios where traders might not be able to secure a profit. This can be due to human error factors such as having no strategy, overtrading, using poor risk management techniques, having unrealistic expectations, having limited capital, or engaging in emotional trading based on greed, fear, or overconfidence.
There can also be factors out of the trader’s control that impact their traders in a negative way like events that cause the market to go against the trader. In either manner, there are times when traders have to take an “L” to simply mitigate losses before they get worse:
- Depending on the time horizon of the call option they bought, the trader can let the option expire if it’s not profitable with a loss limited to the premium paid.
- Some call options that are losing money should be sold before the expiration date, so as to mitigate further potential losses.
Common Mistakes to Avoid
It’s best to trade call options without making these major mistakes along the way. We’ve highlighted some of the most common mistakes that newcomers make when selling call options. If you can steer clear of these major problems, you’ll find yourself having fewer issues with trading call options and finding a way to profit from them.
- Buying Options Without a Clear Strategy: Don’t purchase Nvidia call options on a stock without a well-defined plan for when to buy or sell. It can have a profound impact on the profitability of the trade. You need to analyze where the stock price is about its historical highs and lows. The idea is to buy low and sell high to be profitable, and you cannot do that if you’re buying options without a clear plan in mind.
- Choosing Strike Prices Too Far Out of the Money: Traders shouldn’t make the simple mistake of choosing strike prices that are considerably higher or lower than the current market price of the underlying stock. The likelihood of the contract expiring as worthless is much higher because a large price movement is needed for the trader to become profitable.
- Ignoring Time Decay and Expiration Dates: Don’t fall into the trap of thinking an option price will remain constant regardless of how close it is to the expiration date. As the option gets closer to the expiration date, it’s going to lose some of its value (time decay). Ignoring these factors can cause traders to underestimate the risks involved and severely overestimate the potential profit from the call option.
- Overleveraging and Risking More Than You Can Afford to Lose: This mistake occurs when traders use an excessive amount of leverage when trading contracts by taking on a larger position in an underlying asset than can be supported comfortably by the capital they have. Traders put themselves at financial risk in the event the market moves against them. This can occur when traders are trading with excessive margins. Are you buying deep-in-the-money options with high premiums, or using too large of a contract size for your available capital balance?
Tips for Success as a Beginner
Follow these tips if you’re new to trading call options and you want to learn how to successfully profit with these trades more often than not. There are some general suggestions and advice that can go a long way and get you into some of the good practices that are needed to succeed.
- Start With a Small Position to Limit Risk: If you’re new and have no experience, it’s best to begin with small options contracts and positions and then work your way up once you begin getting more comfortable with how it all works. There’s an additional advantage of keeping your level or risk low by taking on smaller positions. The less you risk, the less of a blow your available capital takes.
- Use a Paper Trading Account to Practice: Before using real money, it’s best to look into a demo account or paper trading to gain some practice and experience with trading call options. Use a virtual balance to practice these trades and learn the best strategies for locking in profit when dealing with call option contracts. Doing so will keep you from losing money unnecessarily when you could have been practicing for free and honing your trading skills.
- Continuously Educate Yourself: Traders should get in a good habit of teaching themselves about options strategies and market trends to become better in their trading sessions. You can use your trading app of choice as a resource for learning. Many usually carry learning tools like articles, webinars, or video content that help teach traders about the basics of trading as well as the advanced concepts that come with time and experience.
Buy Nvidia Stock While the Bullish Demand for AI Hardware and Software is Hot
If you’re interested in investing in Nvidia and buying call options on its stock, choose a reputable trading app and decide what your trading goals will be as well as your overall approach to trading (conservative or aggressive). Once your account is all setup and you’ve bought Nvidia stock at a reasonable price, monitor your options and decide when the best time is to exit before the contract expires. Ideally, you’ll want to exit with more money than you paid to enter the trade.
It’s key to remember the importance of research, choosing the right brokerage, and managing risk effectively. Starting small, learning from your experiences, and exploring more advanced options strategies as you gain confidence are good practices that we cannot stress enough for newer traders. When in doubt, you can run calls or put options scenarios through demo accounts or paper trading simulators to get a feel for how it works to trade Nvidia stock options!
Frequently Asked Questions
Check out some of the most common questions we’ve gotten from our customers and readers about buying call options for the Nvidia stock. Hopefully, these questions and our answers can close up any of the gaps we might have left in our guide.
What Is the Minimum Amount Needed to Buy an Nvidia Call Option?
The minimum amount is the price of the options contract (the cost of the premium per share multiplied by 100).
How Do I Know Which Strike Price to Choose?
To choose the right strike price, take time to think about your desired profit and tolerance for risk as well as look at the entire trade with multiple technical indicators and market analysis tools. If you’re doing a covered call, it’s best to choose a strike price that’s slightly above the current price to generate income while allowing for potential upside. For protective puts, choose a strike price that’s slightly below the current market price.
Can I Lose More than My Initial Investment with a Call Option?
You cannot lose any more than your initial investment with the call option. It’s the premium paid for the contract. The loss is limited to the premium, regardless of how much the underlying stock price falls.
What Happens if I Don’t Sell My Call Option before Expiration?
If you don’t sell your call option below the expiration date, the contract expires as worthless, and you end up losing the premium you paid to enter the contract.
Is Buying Call Options Suitable for Beginners?
Specifically, buying covered calls is a good beginning trader for newcomers. It’s similar to buying stocks. Traders using covered calls are buying 100 shares per call that they plan on selling, and then they’re picking a strike price, an expiration date, and a price they’re willing to accept for the call.
