(Bloomberg) -- Nvidia Corp. may not be a classic meme stock, yet when it comes to option trading during the latest leg of the rally, it certainly acts like one.

Call option trading jumped on Tuesday to the fourth-highest notional level with Nvidia shares trading at a record north of $1,100 apiece. The elevated volume, which on an outright basis was almost double the 20-day average, is especially striking given it was outside of an earnings report for the artificial-intelligence leader. The trading frenzy added fuel to stock market gains in what appeared to be a so-called gamma squeeze.

Thousands of near-worthless call contracts set to expire at the end of this week suddenly rallied 1000% or more when shares opened sharply higher. This put pressure on option dealer desks who had sold those contracts to adjust their hedges by buying more shares. This creates a feedback loop as the buying drove shares higher, bringing more options into the money and forcing dealers to buy even more shares to stay balanced.

The price movements echo the rally in Tesla Inc. shares during late 2021 as shares of the electric carmaker went parabolic in similar fashion and the same market mechanics. And once again Elon Musk is somewhat involved as Nvidia’s rally was pushed into its third day after Musk fueled the latest artificial-intelligence frenzy by accelerating his challenge of OpenAI. The post-earnings rally has now added some $470 billion to the chipmaker’s market capitalization. 

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