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Most Active Options Update: NQ Mobile Inc (ADR) (NQ)

NQ Mobile Inc (ADR) option volume is soaring, as the stock gets placed on the SSR list

by 7/18/2014 1:31 PM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest this afternoon is NQ Mobile Inc (ADR) (NYSE:NQ).


It's been a volatile session for NQ Mobile Inc (ADR) today -- with the shares falling to a new record low of $3.45 right out of the gate, only to rally 11.5% this afternoon. At last check, the equity was lingering near $4.86, about 4.7% off its intraday high of $5.10, which was tagged around midday.

Amid this whipsaw price action, the stock was relegated to the short-sale restricted (SSR) list -- at present, more than 70% of NQ's float is sold short -- which has helped send options volume soaring. In fact, roughly 79,000 contracts have changed hands thus far, more than doubling the equity's average daily volume of 32,000.

Most active is the deep out-of-the-money December 12 call, due to one massive block of 20,000 contracts that crossed the tape earlier. This could possibly represent closeout activity of a similarly sized sweep that traded on June 27.

Meanwhile, the next most active NQ strike is the July 5 call, where 6,530 contracts have been exchanged. The majority of these calls traded at the ask price, and volume outstrips open interest -- two indications of buy-to-open activity.

In order for these call buyers to profit, NQ must be sitting north of the aforementioned intraday high at tonight's close, when the July series of options expires. Specifically, breakeven for these traders is $5.12, which is the strike plus the volume-weighted average price of $0.12. Gains are theoretically unlimited north of here, while losses are capped at the premium paid, should NQ close out the session south of the strike.

Today's roller-coaster ride comes amid reports that NQ Mobile Inc (ADR) (NYSE:NQ) has dismissed PricewaterhouseCoopers' Zhong Tian LLP as its independent auditor, as NQ faces allegations of fraud from short seller Muddy Waters Research Group. In its place, the Chinese-based Internet issue has hired Marcum Bernstein Pinchuk LLP.


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