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Option Players Rally as BlackBerry Ltd (BBRY) Hits Double Digits

Calls and puts are trading at an accelerated clip on BlackBerry Ltd today

by 6/23/2014 2:52 PM
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Option Brief: BlackBerry Ltd (NASDAQ:BBRY) soared more than 24% last week, and the stock is continuing with this upward momentum today, thanks to last night's bullish brokerage note from Evercore. At last check, BBRY was 2.1% higher at $10.02 -- pushing into double-digit territory for the first time since early March. What's more, the shares are on pace to notch their first daily close north of their 320-day moving average since Sept. 9. In the stock's options pits, activity is accelerated on both sides of the aisle, but calls have easily emerged as the preferred contracts, and are outpacing puts by a more than 2-to-1 margin.

The most active contract, however, falls on the put side. Specifically, the July 9 put has seen 14,294 contracts switch hands. Although volume outstrips open interest -- pointing to the initiation of new positions -- the majority of the activity has occurred somewhere between the ask and the bid prices, making it impossible to know whether the contracts are being bought or sold to open, respectively.

The most active BBRY call is the weekly 6/27 10 strike. A healthy portion of the 10,004 contracts traded here have done so on the ask side, and implied volatility is up 3 percentage points, two indications of buy-to-open activity. The volume-weighted average price (VWAP) for the calls is $0.32, making breakeven at this Friday's close -- when the contracts expire -- $10.32 (strike plus VWAP). Profit for today's call buyers will begin to accrue with each additional step north of here the stock settles at week's end. Risk, meanwhile, is capped at 100% of the premium paid, should BlackBerry Ltd (NASDAQ:BBRY) be back in single-digit territory when the calls expire.


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