$QCOM calls skyrocket 11-fold

Qualcomm surged on news that it has settled a royalty case with Apple, handing huge profits on upside positions in the chip maker.

On March 1, Investitute’s market scanners identified the purchase of 19,452 July $62.50 calls for $0.79 to $0.84 with shares at $54.10. These were clearly new positions, as open interest in the strike was only 2,295 contracts before that session began.

Those calls traded for as much as $9.50 today, more than 11 times their purchase prices. The stock soared 30.67% in the same time period, a huge move but 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.

QCOM spiked up 23.21% to close at $70.45 this afternoon. In announcing today’s settlement, the two technology companies said they are ending all their court disputes worldwide.