Applied Optoelectronics calls soar

Bullish option traders are reaping gigantic profits in network-technology company Applied Optoelectronics

On June 30, Investitute’s proprietary programs found that 2,300 Weekly $61 calls expiring on Aug. 11 were purchased for $6.80 to $8.50 with shares at $62.95. There was no open interest in the strike before that session began, showing that it was a new position.

Today those calls traded for $22.15, an average gain of 1,900 percent. The stock has surged 31 percent during the same period, a large gain but still nowhere near that of the options.

Long calls lock in the price where the 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.

AAOI jumped 7.89 percent today to close at $84.20. The fiber-optic equipment maker pre-announced quarterly results that blew past analysts’ estimates yesterday.