$NOK bulls turn big gains in a day

It took less than 24 hours for option traders to post large profits in Nokia.

Just yesterday afternoon Investitute’s market scanners found that 14,000 Weekly $5 calls expiring tomorrow were bought for $0.10 to $0.13 with shares at $4.77. This was clearly fresh buying, as volume was well above the strike’s open interest of 3,727 contracts.

Those calls traded for $0.59 this morning, just shy of 6 times their original purchase price. The stock rose 16.8% at the same time, showing how quickly options can far outperform gains in 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.

NOK rallied 12.27% to $5.40 today. The telecommunications company beat fourth-quarter earnings estimates overnight.