Nokia calls surge with Apple truce

Bullish positions on Nokia yielded exponential profits today after the company settled a patent dispute with Apple.

On May 2, Investitute’s tracking systems found that 13,000 July $6 calls were purchased for $0.17 to $0.20 with shares at $5.85. These were clearly new positions, as their volume far surpassed the strike’s open interest of 4,449 contracts.

Those calls traded for $0.66 today, more than tripling in value. The stock rose just 13.5 percent in the same time frame, showing the kind of leverage that can be achieved through 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.

NOK was up 5.31 percent to close at $6.54 today. In addition to the patent settlement, Apple said it would purchase network products and services from the Finnish telecommunications company.