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Option Brief: Roughly 40,000 contracts have been exchanged in BlackBerry Ltd's (NASDAQ:BBRY) options pits this afternoon, with calls holding a decisive advantage over points -- about 33,000 to 6,000-plus. Stealing the spotlight is the smartphone maker's weekly 4/11 8-strike call, where nearly 12,200 contracts -- including a lot of 9,783 -- are on the tape. Volume outstrips open interest here, implied volatility is moving higher, and 94% of the contracts have traded off the ask -- all signs of buy-to-open activity. Data from Trade-Alert confirms this theory.
With BBRY sitting 0.9% higher at $8.17, the weekly options are already in the money. However, in order to profit, the traders need the shares to muster a move past $8.43 -- or the strike plus the volume-weighted average price of $0.43 -- by the closing bell next Friday, when the calls expire. By contrast, a finish south of the strike at options expiration would render the contracts worthless, and force the buyers to part with 100% of the initial cash outlay.
Technically speaking, BlackBerry Ltd (NASDAQ:BBRY) shares haven't closed south of $8 since early January. However, the stock entered a brief period of consolidation after reporting mixed first-quarter results last Friday morning. Elsewhere, on the fundamental front, the company announced earlier today that it will be walking away from a partnership with T-Mobile US Inc (NYSE:TMUS).