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Option Brief: BlackBerry Ltd (NASDAQ:BBRY) has added 4.9% to trade at $9.45, as Facebook Inc's (NASDAQ:FB) multi-billion-dollar purchase of WhatsApp bolstered optimism about BBRY's own messaging service. Against this backdrop, BBRY call options are flying off the shelves this morning, with roughly 25,000 traded so far today -- a 39% mark-up to the stock's average intraday volume, and roughly 10 times the number of BBRY puts exchanged.
Most of the action has centered around the near-the-money February 9.50 call, where more than 9,600 contracts have traded, mostly at the ask price. Plus, implied volatility has skyrocketed 11.1 percentage points, and volume outstrips open interest, underscoring our theory of newly bought bullish bets.
To profit on the play, the buyers need BlackBerry Ltd (NASDAQ:BBRY) to extend today's rally and topple the $9.64 level (strike price plus volume-weighted average price of $0.14) by options expiration tomorrow night. However, should the equity remain beneath the strike through the next session-and-a-half, the most the buyers will forfeit is the initial premium paid for the contracts.