Stocks quoted in this article:
Option Brief: BlackBerry Ltd (NASDAQ:BBRY) entered double-digit territory today for the first time since Sept. 20, on news that BBRY smartphones will make up 98% of the devices used in one of the U.S. Department of Defense's new networks. Meanwhile, the stock's options activity is heavier than usual, particularly on the call side, where contracts have traded at about triple the average intraday pace.
Attracting notable attention is the weekly 1/24 10-strike call, where it appears fresh long positions have been opened. To be specific, the majority of the 9,800 contracts traded here went off at the ask price, implied volatility has spiked, and volume exceeds current levels of open interest, collectively pointing to bullish activity at this strike.
Though BBRY has pared its gains to 9.1% to trade at $9.91 since earlier hitting an intraday high of $10.19, today's call buyers expect the stock to regain ground atop the $10 mark by this Friday's close, when the weekly options expire. Right now, the options have a 49% chance of an in-the-money finish, as delta for the call is sitting at 0.49.
While BlackBerry Ltd (NASDAQ:BBRY) is still facing a year-over-year deficit of 38.2%, the stock has been in rebound mode since the start of 2014, tacking on 31.6% year-to-date. Therefore, considering 21.8% of BBRY's stock is sold short, it is possible that some of today's heavy call activity is actually the work of short sellers hedging their bearish bets against the recent uptrend.