$INFN bulls rack up quick gains

It took barely a week for option traders to double their money on upside positions in Infinera.

On April 8, Investitute’s proprietary programs found that 3,000 Weekly $4.50 calls expiring on May 3 were purchased for $0.30 to $0.40 with shares at $4.68. Open interest in the strike was a mere 16 contracts before the trade occurred, showing that this was a new position.

Those calls traded for as much as $0.70 today, twice their average purchase price. The stock rose less than 3% in the same time frame, illustrating the kind of leverage that can be achieved with options.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

INFN ended the session off 0.6% to close at $5 even. Quarterly results for the optical-networking equipment maker are estimated for May 9 after the market closes.