$OKTA bulls rack up fivefold gains

OKTA surged after a strong earnings report today, returning exponential profits on upside option positions.

On Nov. 20, Investitute’s proprietary programs flagged the purchase of 5,400 December $50 calls for $2.50 to $4.80 with shares at $48.77. Volume was almost double the strike’s previous open interest, showing that these were new positions. Investitute co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report” and updated the trade the next day after the price of those calls doubled overnight.

Today those calls sold for $19, more than 5 times their average purchase price. The stock rallied 41.07% in the same time frame, a huge move but still nowhere near that of its options on a relative basis.

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.

OKTA spiked higher by 10.39% to $66.95 today. The security-software company topped quarterly estimates and issued a strong outlook yesterday afternoon.