$AAPL bulls double money in hours

Upside option trades placed in Apple early today doubled by the afternoon as shares rebounded sharply from a new seven-month low.

This morning, Investitute’s market scanners found that 20,000 Weekly $170 calls expiring this Friday, Dec. 14, were bought from $1.37 to $2.04 with shares as low as $164.26. This was clearly a new position, as open interest in the strike was only 3,245 contracts before the activity appeared.

Investitute co-founder Jon Najarian cited the unusual activity on CNBC’s “Halftime Report” today, noting that the buying was unusually huge. Apple’s shares immediately began to move higher after his comments, helping turn the broader market around.

Those calls traded for as much as $3.25 this afternoon, more than twice their purchase prices, in a mere fraction of the trading day. The stock rose 3.2% at the same time, illustrating how quickly options can far outperform their underlying shares.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

AAPL opened significantly lower this morning before climbing back to close up 0.8% to $169.83 today. The iPhone maker disclosed late this afternoon that it will appeal a major device sales ban in China that resulted from complaints brought by chip maker Qualcomm (QCOM).