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Massive Volume as Nokia Put Player Makes a Minor Adjustment

January puts on NOK are flying across the tape

by 12/18/2012 1:13 PM
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Put volume has skyrocketed today on Nokia Corporation (ADR) (NYSE:NOK - 4.21), with no fewer than 133,000 contracts crossing the tape at last check. Most of the action is taking place in the stock's January 2013 options series, with 47,443 contracts trading at the 4.50 put and another 44,493 contracts exchanged at the 4 strike. Upon closer inspection, it looks as though a single speculator is responsible for much of the volume at these two back-month put options.

Specifically, two massive blocks totaling 33,662 contracts traded at the bid price on NOK's January 4 put, suggesting they were sold, while two matching blocks of 33,662 contracts changed hands at the ask price on the January 4.50 put, indicating they were bought.

Today's volume at the January 4.50 strike is easily outstripping open interest of 2,072 contracts, so it appears as though these puts were newly bought to open. Conversely, the January 4 put already carries open interest of 89,386 contracts, and it looks as though today's volume consists primarily of sell-to-close activity. In other words, this trader is likely adjusting his stance on NOK by rolling his puts up to the January 4.50 strike from the January 4 strike.

Technically speaking, NOK has been on a tear lately. The stock recently rallied above former resistance at its 40-week moving average, and the shares have now gained some 158% from their July 20 low of $1.63. With 8.6% of the equity's float sold short, a short-squeeze rally could help to propel NOK even higher during the near term.

 Weekly Chart of NOK since September 2011 With 40-Week Moving Average


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