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Ericsson Telephone (ERICY – 13-7/16) manufactures a variety of equipment for the telecommunications and networking industries, including mobile phones and modem apparatus. Yesterday morning, the company announced that it expects to post a 21-percent rise in profits for the third quarter. However, it was also noted that ERICY's mobile phone unit could see widened losses.
This news spurred a rash of options buying, most notably at the January 13-3/4 strike. Nearly 8,000 contracts traded on the January 13-3/4 put, while 6,000 contracts crossed the tape on the correlating call. Large block trades crossed the tape on both strikes shortly after 2:30 p.m. The blocks were not indicated as spreads but are almost certainly related given the similarity in volume and time. Nearly all of yesterday's volume translated into new open interest today.
In early morning trading, ERICY has sunk along with the rest of the market, sloughing off over five percent and enduring a bear gap at the open. The shares are now trading below all of their significant moving averages, including their 20-month trendline.