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Option Brief: Nokia Corporation (ADR) (NYSE:NOK) was targeted by call traders yesterday, as speculators digested a patent deal with HTC Corp., as well as rumors of a new low-end smartphone powered by Google Inc's (NASDAQ:GOOG) Android operating system. The stock saw 21,000 calls cross the tape by the end of the session, more than tripling the number of NOK puts exchanged.
Most active was the April 8 call, where close to 4,500 contracts changed hands, primarily at the ask price. Open interest skyrocketed at the strike overnight, hinting at buy-to-open action. By purchasing the calls at the volume-weighted average price (VWAP) of $0.30, the buyers' profit will increase the higher NOK climbs atop $8.30 (strike plus VWAP) before the options expire at the close on Thursday, April 17. Risk, meanwhile, is limited to the initial premium paid for the contracts.
Nokia Corporation (ADR) (NYSE:NOK) closed yesterday at $7.38, notching a second straight finish atop its 10-day and 20-day moving averages -- a feat not accomplished since Jan. 10, when the shares tagged a two-year high of $8.20. In early trading, the shares are down 0.8% at $7.32.