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Option Brief: BlackBerry Ltd (NASDAQ:BBRY) call volume outpaced put volume by a roughly tenfold margin yesterday -- 18,000 contracts to 1,788. However, not all of the call activity was of the typical bullish variety. In fact, the data surrounding BBRY's most active strike suggests neutral-to-bearish positions were initiated on the mobile phone maker.
Specifically, 4,233 contracts -- including a block of 2,175 --crossed the tape at the July 10 call, more than doubling the volume at BBRY's second most active option. All of the trades occurred at the bid price, and open interest tacked on nearly 3,900 positions overnight, making it safe to assume the contracts were sold to open.
Long story short, the call writers expect BBRY to churn below the $10 strike through July options expiration, rendering the contracts worthless and allowing the traders to retain the initial premium collected as profit. However, if the stock rallies into double-digit territory, the sellers risk being assigned, and having to sell the shares for $10 apiece, no matter how much they're worth.
On the charts, BlackBerry Ltd (NASDAQ:BBRY) gained 1.5% yesterday to finish at $7.29. The stock is fresh off a successful test of support at the $7, and has tacked on 34% since hitting a decade-plus low of $5.44 in December.