VirnetX Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of mobile security researcher VirnetX (ASE: VHC) jumped as much as 20% in extremely heavy afternoon action.

So what: Around 2 p.m. Eastern, the rumor mill and message boards ran hot with the idea that Apple (NAS: AAPL) had been denied a request to re-examine a VirnetX patent. If true, this gives VirnetX a stronger leg to stand on in a patent infringement dispute with the iPhone maker.

Now what: VirnetX investors should be ready for the other shoe to drop, sending the share price like a rocket -- in either direction. A victory or settlement in the Apple case would be huge, but a defeat would crush the stock. A valid patent is a good start, but not a guarantee of ultimate victory. The only safe play on this hypervolatile stock is to either stay away or place options bets on high volatility.

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At the time thisarticle was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.

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