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Encouraging data from across the pond has pushed Research In Motion Ltd (NASDAQ:BBRY) 3.1% higher to $15.49, fueling a flood of short-term call trading. So far today, the BlackBerry maker has seen around 77,000 call options cross the tape, representing a 35% mark-up to its average intraday call volume, and more than double the number of BBRY puts exchanged thus far.
Digging deeper, bulls are buying the weekly 5/3 15.50-strike call, which has seen more than 8,800 contracts cross the tape on open interest of just over 6,000 contracts, pointing to newly opened positions. Meanwhile, the weekly 5/3 16-strike call has seen roughly 7,500 contracts cross, and implied volatility is nearly 10 percentage points higher -- also a sign of fresh initiations. Plus, the majority of the weekly calls traded on the ask side of the aisle, confirming our suspicions of buyer-driven volume.
By purchasing the 15.50-strike calls at a volume-weighted average price (VWAP) of $0.36, the buyers' profit will increase the higher Research In Motion Ltd (NASDAQ:BBRY) muscles north of $15.86 (strike price plus VWAP) this week. Breakeven for the 16-strike call buyers is $16.20, considering the VWAP was $0.20. Regardless of strike, risk is capped at the initial premium paid for the calls.
Today's affinity for short-term calls marks a change of pace for BBRY. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.88 stands higher than 70% of all other readings of the past year, suggesting near-term options traders are more put-biased than usual right now. Echoing that skepticism, short interest accounts for more than a third of BBRY's total available float, and would take about a week to buy back, at the security's average pace of trading.
As alluded to earlier, the shares of BBRY are higher thanks to encouraging data from Europe. Specifically, after the U.K. debut of the company's new Q10 smartphone, CEO Thorsten Heins pointed to "very, very good first signs" on Bloomberg TV. In addition, Mark Sue of RBC Capital Markets waxed optimistic on the smartphone's reception, and said the Q10 could spark a wave of corporate BlackBerry upgrading. The Q10 is slated to hit Canada later this week, and the U.S. in late May.
Should the Apple Inc. (NASDAQ:AAPL) rival extend today's advance, a reversal in sentiment in the options arena, or a short-covering rally, could translate into contrarian tailwinds for the shares.