Earnings Preview: BlackBerry Ltd (BBRY)

BlackBerry Ltd (NASDAQ:BBRY) option traders are taking sides ahead of earnings

by Josh Selway

Published on Mar 31, 2016 at 10:57 AM

After its earnings release in December, BlackBerry Ltd (NASDAQ:BBRY) shot 10.4% higher in the following session. The options market is anticipating a similar one-day move of 11.1% ahead of the company's earnings release tomorrow morning. What's more, BBRY option traders have initiated more than five long call options for every long put during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), pointing to bullish expectations for the stock. 

Among the BBRY options that have added the most open interest during the past two weeks is the May 9 call. According to the ISE, CBOE, and PHLX, traders have opened long positions, betting on the stock to top $9 before back-month expiration at the close on Friday, May 20. 

In today's trading, many speculators are targeting puts, with volume at 1.2 times the average intraday pace. The most popular put is the April 7 strike, which traders may be buying to open, betting on the stock to drop below $7 before front-month options expire at the close on Friday, April 15. 

Elsewhere, BBRY has been a long-time favorite of short sellers. Over 14% of the stock's float is currently sold short, and it'd take these bears almost three weeks to cover, at average daily volumes. In fact, it's possible some of the recent call buyers -- especially those targeting out-of-the-money strikes -- are short sellers seeking protection ahead of earnings.

On the charts, BlackBerry Ltd (NASDAQ:BBRY) has bounced back some since its year-to-date low of $6.33 on Jan. 20, but is still down 12.6% in 2016. Today, the shares have managed a 1.2% gain to trade at $8.11. 

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