BlackBerry Ltd (BBRY) Jolts Higher on Pink Slip Speculation

According to reports, BlackBerry Ltd (NASDAQ:BBRY) recently passed out a round of pink slips

Jul 21, 2015 at 2:23 PM
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BlackBerry Ltd (NASDAQ:BBRY) is popping today -- up 2.9% at $7.90 -- on speculation the company handed out a round of pink slips. Today's positive price action has weekly option traders eyeing the $8 mark, with BBRY's weekly 7/24 and 7/31 8-strike calls seeing the most action thus far.

Drilling down, it appears these two groups of speculators are targeting the overhead area in decidedly different ways. The weekly 7/24 8-strike call appears to be a primary target of option buyers, meaning speculators expect BBRY to muscle atop $8 by Friday's close -- when the series expires. Meanwhile, it looks as if the weekly 7/31 8-strike call is being sold to open as traders are betting on $8 to serve as a short-term ceiling.

From a wider sentiment perspective, it's been call buyers who have been dominating BBRY's options arena. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day call/put volume ratio of 7.17 ranks in the 95th annual percentile. Simply stated, calls have been bought to open over puts with more rapidity just 5% of the time within the past year.

Echoing this call-skewed backdrop is BBRY's Schaeffer's put/call open interest ratio (SOIR) of 0.34. Not only does this indicate call open interest triples put open interest among options set to expire in three months or less, but it sits below all comparable readings taken in the past year. In other words, speculative traders are more call-heavy now than they've been at any other point over the last 12 months.

Elsewhere on the Street, sentiment is tilted more toward the skeptical side. More than one-fifth of the security's float is sold short, representing 7.8 times BBRY's average daily pace of trading. Plus, nearly 82% of covering analysts maintain a "hold" or worse rating. Should BlackBerry Ltd (NASDAQ:BBRY) extend today's positive price action, a capitulation among short sellers and/or a round of upgrades could help fuel the stock's fire.

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