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Here’s how to play Nvidia into earnings

Nvidia shares have taken off, surging nearly 200 percent in the past year, making it the best performing stock in the S&P 500 over that period. Traders are anticipating an even sharper move when it reports earnings on Thursday after the bell.

As Nvidia gets ready to report second-quarter earnings, the options market is implying about an 8 percent move in either direction, which is considerably less than the previous 4-quarter average of 14 percent.

According to Dan Nathan of RiskReversal.com, the implied earnings move refers to the at the money straddle, and in Nvidia's case that would be about a $14 shift in either direction.

"If you were inclined to play this stock, when you consider some of the earnings moves it had over the past few quarters, there was one where it was up 30 percent. There was another one where it was up 17 percent. A $14 implied move is not so bad. … I actually think the move is implied pretty cheaply," Nathan said Tuesday on CNBC's "Fast Money."

Nathan outlines several ways using options to play Nvidia into earnings. "If you're long [Nvidia], and it's been up a couple hundred percent over the last couple of years, some near the money puts to protect makes sense. Or some placement at the money calls, that sort of thing."

Nvidia shares were trading at the $170.10 range midday Wednesday.

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