How traders are cashing in on Home Depot

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Options Action: Home Depot earnings preview

Home Depot is showing improvement, and traders are cashing in.

The company's shares jumped about 3 percent Tuesday, after the home improvement retailer reported better-than-expected sales growth in its second-quarter earnings and raised its full-year guidance.

On Monday, Home Depot call options volume was three times put options volume, indicating bullish sentiment among traders.

In one of the biggest single transactions, a trader bought 4,000 September 125-strike calls for $1. As of 11 a.m. Eastern time Tuesday, Home Depot call options traded at $1.50, which means the trader has made $200,000 so far on his trade.