Nvidia (NVDA) is gearing up to announce its earnings after the closing bell on Wednesday. Traders are anticipating an 11.3% swing in either direction, based on options pricing, setting the stage for potential volatility in Nvidia stock.

The past six earnings reports have shown Nvidia's stock price surpassing the lower end of its projected range. With the earnings report due on Feb. 23, traders are eyeing a bull put spread option trade as a strategy to capitalize on Nvidia's performance.

In setting up the option trade, traders are looking at the at-the-money put and call for the nearest expiration after earnings. By selling the 605 put and buying the 600 put for the same expiration date, a bull put spread is created. This strategy offers a maximum profit if Nvidia finishes above 605 at expiration, with a known maximum loss if the stock closes below 600.

The potential return on risk for this trade is calculated at 28%, and the break-even point for the bull put spread is determined at 603.90. While there is little room for adjustments with short-term trades held over earnings, traders are keen on this strategy as Nvidia has been a top performer in its industry group, boasting high Composite, EPS, and Relative Strength Ratings.

Despite the potential for a 28% return in just a few days, traders are advised that this trade style is high-risk and may result in a total loss. Investors are reminded to exercise caution when trading options and to seek advice from a financial advisor before making any investment decisions.