As the resident options expert here at Cabot, one of my most important (and rewarding) responsibilities is education. Options trading can look complicated if you are just getting started, so it’s my job to make sure that our readers understand not only the mechanics of how we place trades, but also why we place them.
So, with that in mind, I wanted to run through a recent trade that netted subscribers to the newly launched Cabot Options Trader Essentials service 170% returns in just over a month.
I’ve written before about how I track bullish options activity – the kind of activity that puts trades on my radar – so today’s post will focus more on how I open and close a trade after I’ve identified the opportunity (and how I communicate that to my subscribers).
When options trading activity is bullish enough to meet my criteria, I like to give my subscribers an early heads-up by letting them know that the stock is “on watch.”
[text_ad]
In the case of Nokia (NOK), I flagged that in a “Stock on Watch” alert on April 23.
April 23, 2026
Stock on Watch – Nokia (NOK)
As earnings season slowly gets going this week, then transitions to a Mag. 7-led reporting season next week, and then really gets going the following weeks, I would expect we will be adding
more and more earnings season winners.
One name that I’m potentially interested in is Nokia (NOK), as the stock is trading higher by 8% today following earnings, and this follows a strong stock move ahead of earnings in recent
weeks.
And into this positive earnings reaction this morning, traders are aggressively adding calls looking for this rally to continue, including:
Buyer of 3,000 Nokia (NOK) December 15 Calls for $0.80 – Stock at 10.5
Buyer of 14,000 Nokia (NOK) June 9 Calls for $1.72 – Stock at 10.5
Given this option activity, I have my eye on NOK as the stock is breaking out to a 16-year high this morning, and this stock/company could be a potential under-the-radar/emerging AI play.
The bullish option activity continued from there, and I kept subscribers up to date in the next weekly update:
April 27, 2026
Stocks on Watch
The two top stocks on my watchlist were earnings season winners from last week. Let’s dive in:
As I wrote late last week, I was growing intrigued by Nokia (NOK) as the stock was trading at a 16-year high and option activity was ramping bullish, including these trades:
Buyer of 3,000 Nokia (NOK) December 15 Calls for $0.80 – Stock at 10.5
Buyer of 14,000 Nokia (NOK) June 9 Calls for $1.72 – Stock at 10.5
Buyer of 10,000 Nokia (NOK) June 11 Calls for $0.53 – Stock at 10.15 (rolled from May calls)
Buyer of 3,000 Nokia (NOK) December 10 Calls (exp. 2027) for $3.05 – Stock at 10.25.
And this morning, Wall Street firm Argus upgraded NOK stock to Buy, noting the company’s AI-related demand growth. The firm maintained its price target of 15 on the shares.
I’m very interested in NOK.
That persistent call-buying was enough to push Nokia from my watchlist and into the portfolio later that day. Here’s the trade alert:
April 27, 2026
Buy the Nokia (NOK) December 11 Calls (exp. 12/18/2026) for $2.15 or less.
As I wrote this morning, Nokia (NOK) was racing to the top of my watchlist as the stock was breaking out to a new 16-year high following earnings. This stock strength, on top of very bullish option activity, is a setup I liked a lot.
Fast forward to this morning/afternoon and this bullish option activity continues, including these trades made today:
Buyer of 7,000 Nokia (NOK) September 15 Calls for $0.62 – Stock at 11
Buyer of 14,000 Nokia (NOK) May 12 Calls for $0.30 – Stock at 11
Buyer of 4,000 Nokia (NOK) June 10 Calls for $1.65 – Stock at 11.15.
The call buying noted above is a small sample of the bullish option positioning I’ve seen today in NOK, and I am going to get involved via a December call.
To execute this trade you need to:
Buy to Open the NOK December 11 Calls
The most you can lose on this trade is the premium paid, or $215 per call purchased.
The risks I see in this trade are the following:
The market has been on a big run since the Iran war lows, and it is possible that the indexes and stocks are due to cool off.
Similarly, AI-related plays (which are partly what is helping NOK stock) have been on a monster run as well, and that group could lose momentum at some point.
And while there is risk, given the non-stop call buying as well as the stock strength, I am going to get involved with NOK today via a longer-term December call that should be able to withstand potential market gyrations.
We were filled at $1.93, or $193 per call purchased, and Nokia was moving quickly after we got involved. It triggered the first level of profit-taking just two days later:
April 29, 2026
Sell a Third of Existing Position: Sell a Third of your NOK December 11 Calls for $2.30 or more.
Very quickly, our NOK calls purchased on Monday are at a potential profit of 20%. And while I think the stock goes higher in the weeks/months to come (especially given the bullish option activity that has not stopped), I am, as always, going to stick to the profit-taking system and sell the first third of our position today.
To execute this trade you need to:
Sell to Close a Third of the NOK December 11 Calls
Nokia continued to rise, and it did so quickly enough to trigger our second round of profit-taking the next day:
April 30, 2026
Sell a Third of Existing Position: Sell a Third of the NOK December 11 Calls for $3.40 or more.
VERY quickly, our NOK December 11 calls that were bought on Monday are at a potential profit of approximately 75%. Let’s stick to the system and lock in a second profit today, and then we will go for the grand slam on the balance of this trade in the weeks/months to come.
To execute this trade you need to:
Sell to Close a Third of the NOK December 11 Calls
Please note, having twice taken partial profits in the last two days, I will NOT set a next sale level, and instead will let this trade run as high as possible.
Those two rounds of profit-taking bought us the opportunity to let the trade continue to work in our favor. In lieu of setting an upside price target, I put a mental stop in place that would prompt us to exit the trade if it started losing steam. That ultimately prompted the sale of the final third of the position on May 29:
May 29, 2026
Sell Existing Position: Sell your NOK December 11 Calls for $4.75 or more.
After breaking out to a new high just days ago, NOK (and many more high-flyers) has been bleeding lower. And while I think it’s possible that this is a short-term pullback, it’s also possible that this is the start of the long-awaited cooling off for AI names.
Regardless, our NOK calls have broken my mental stop, and we are going to exit our trade today for a nice profit.
To execute this trade you need to:
Sell to Close your NOK December 11 Calls
After closing out the final third of the trade, we had netted a 170% return in a little more than a month.
Not every trade plays out that quickly, but it’s important to note that the trading system dictates how I handle the trade, not the calendar. (You can see another example of the system in action in this write-up of a recent trade in Corning (GLW).)
Of course, options have a built-in expiration date, so the time until expiration is something I always keep in mind, but the goal isn’t to get into and out of a trade as quickly as I can.
The short-term options trades, like weekly options and 0DTE (zero days till expiration) options, simply don’t give investors enough time for their trades to play out – they’re more like gambling than investing.
Instead (and as you can see in the trade breakdown above), I look for signs of meaningful options buying, take incremental profits on the way up, and then take the big swings only once we have some profits in the bank.
It’s a system that’s served me well over the years, and if you’re interested in seeing what trade we place next, consider a subscription to Cabot Options Trader Essentials. We’ve got a special offer available for new subscribers right now.
[author_ad]
