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Roughly 22,000 BlackBerry Ltd (NASDAQ:BBRY) puts are on the tape so far today -- more than doubling the expected intraday volume, and easily outpacing the 15,000 calls traded. Not surprisingly, the most active strike is on the put side of the aisle.
Diving into the details, 8,104 contracts have been exchanged at the cell phone maker's May 6 put. The majority crossed as a sweep of 6,810 contracts, which transpired at the bid price, hinting at seller-driven activity. What's more, implied volatility at the strike is on the upswing, and volume has surpassed open interest, making it safe to assume new neutral-to-bullish bets were initiated.
Simply stated, today's BBRY put writers expect the shares -- currently 1.1% lower at $7.20 -- to remain above the 6 strike through the close on Friday, May 16, when the back-month options expire. If that happens, the contracts will be rendered worthless, and the sellers will retain the initial premium collected as their maximum potential profit. However, if BlackBerry tumbles south of the strike, the traders could be assigned, and forced to buy the shares for $6 each, regardless of their price at the time.
Put writing has been a popular strategy in BBRY's options pits of late. During the past 50 sessions, in fact, more than 113,000 puts have been sold to open, versus roughly 96,400 bought to open. It's no wonder, either -- since hitting a 10-year low of $5.44 in December, the stock has tacked on 32.4%.
In fundamental news, BlackBerry Ltd (NASDAQ:BBRY) announced over the weekend plans to release patches for the "Heartbleed" bug by this Friday. A top executive described the risk posed to BBRY users as "extremely small."