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Nokia Corporation (ADR) (NOK) Bears Anticipate Downturn by Year's End

NOK's January 2014 6-strike put attracts the most attention today

by 9/13/2013 3:14 PM
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Options activity has accelerated in Nokia Corporation's (ADR) (NYSE:NOK) options pits today, with roughly 167,000 contracts -- more than two times the intraday norm -- crossing the tape thus far. While calls have been the options of choice, the other side of the fence is home to NOK's most active option, the January 2014 6-strike put, where more than one-quarter of the 63,000 puts traded today have been exchanged.

Specifically, at this strike, 17,000 contracts have changed hands for a volume-weighted average price (VWAP) of $0.46. The majority of the contracts -- including a sweep of large and mid-sized blocks -- went off at the ask price, suggesting they were purchased. Meanwhile, implied volatility has ticked 5.2 percentage points higher, which -- along with data from the International Securities Exchange (ISE) -- points to the initiation of fresh long put positions.

Technically speaking, NOK has had an impressive run on the charts over the past year, tacking on more than 118%. What's more, the stock has enjoyed steady gains since the beginning of September, after the telecom name announced Microsoft Corporation (NASDAQ:MSFT) was discussing a possible acquisition of NOK's devices and services division -- a deal that ultimately transpired. Specifically, NOK has climbed 65% month-to-date, and tagged a new annual high of $6.47 earlier today. The shares currently are sitting pennies below that mark at $6.43.

While the brokerage bunch upwardly adjusts its position on NOK (with Liberum being the latest firm to do so, hiking its price target to 5.70 euros from 4.50 euros this morning), today's put buyers are betting on an end to the stock's technical reign. Specifically, the speculators are anticipating the stock will tumble south of the breakeven price of $5.54 (strike price less the VWAP) by January expiration, when the options expire. In other words, the put buyers expect NOK to pare some of its selloff-driven gains.

Should Nokia Corporation (ADR) (NYSE:NOK) instead continue its upward trajectory, remaining north of the 6 strike upon expiration, the most today's put buyers stand to lose is the initial premium paid per contract.


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