Stocks quoted in this article:
Nokia Corporation (ADR) (NYSE:NOK) has put in a lukewarm showing in 2014, with the shares off about 2.8% to trade near $7.88. On Monday, option traders bet on the stock to come within striking distance of its year-to-date breakeven mark, by buying to open the equity's weekly 8/22 8-strike call for a volume-weighted average price (VWAP) of $0.06.
Taking a step back, calls traded at more than two times the average daily rate yesterday, and outpaced puts by a roughly 8-to-1 margin. Nearly three-quarters of all call volume centered on the aforementioned strike, and based on the average entry price, breakeven for Monday's call buyers is $8.06 (strike plus VWAP). Gains will accrue on each move north of here, while losses are limited to the initial cash outlay, should NOK settle south of the strike price at week's end. As a point of reference, NOK closed 2013 at $8.11.
From a wider sentiment perspective, yesterday's accelerated call volume only highlights the withstanding trend. Specifically, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 17.24 ranks in the 93rd percentile of its annual range. In simpler terms, Nokia Corporation (ADR) (NYSE:NOK) calls have been bought to open over puts with more rapidity just 7% of the time within the past year.