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BlackBerry Ltd (NASDAQ:BBRY) rallied 2.5% yesterday, luring call buyers to the table. By the numbers, 27,000 contracts were exchanged, versus just over 5,300 puts. The stock's 30-day at-the-money implied volatility popped 4.3% to 58.9%, as well, signaling elevated demand for short-term options.
Along those lines, BBRY's weekly 9/5 11-strike call saw buy-to-open action. The volume-weighted average price (VWAP) for these contracts was $0.04, resulting in an at-expiration breakeven point of $11.04 (strike plus VWAP). The buyers are either looking for the shares to topple that mark by next Friday's close -- when the options cease trading -- or are short sellers hedging their bearish positions. After all, 18.5% of the mobile phone maker's float is sold short, which represents more than two weeks' worth of pent-up buying demand, at the equity's average daily trading volume.
Meanwhile, longer-term traders targeted BBRY's January 2015 15-strike call. These contracts, too, were bought to open at a VWAP of $0.27 -- yielding a breakeven point of $15.27 (strike plus VWAP) at expiration. As with all "vanilla" long calls, gains are theoretically unlimited north of breakeven, while losses are capped at the initial premium paid, should the underlying finish below the strike at expiration.
On the technical front, BlackBerry Ltd (NASDAQ:BBRY) is off 0.8% this morning at $10.23, but maintains a 37.5% year-to-date advantage. Should this trend continue, some of the aforementioned shorts may feel compelled to cover, resulting in a fresh wave of buying power.