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Is Nokia Corporation (ADR) (NOK) Headed for Year-to-Date Lows?

Nokia Corporation (ADR) saw a spike in back-month put buying

by 3/18/2014 10:11 AM
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Option Brief: Nokia Corporation (ADR) (NYSE:NOK) saw a relatively rare spike in bearish options betting yesterday, marking a change of pace for the Finnish phone maker. By the close, the equity saw roughly 14,000 puts change hands -- a 49% mark-up to its average daily volume, and nearly double the number of NOK calls exchanged.

Most of the action centered around the May 7 put, where almost 11,000 contracts traded. More than half those puts crossed in one fell swoop, with a block of 6,000 contracts exchanged at the ask price of $0.33. Plus, open interest at the strike skyrocketed overnight, and the International Securities Exchange (ISE) confirms buy-to-open activity.

The puts will move into the money if Nokia Corporation (ADR) (NYSE:NOK) breaches $7 before the close on Friday, May 16, when the options expire. More specifically, the aforementioned put buyer will profit if NOK is south of $6.67 (strike minus premium paid) -- just a stone's throw from its year-to-date low -- at expiration. Risk is capped at the initial premium paid for the puts, should NOK remain atop the strike throughout the options' lifetime. What's more, the stock's short-term options are relatively inexpensive at the moment, as NOK's Schaeffer's Volatility Index (SVI) of 49% sits 7 percentage points from an annual nadir.


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