Apple Lawsuit Leads to More Losses for Nokia Corp (NOK) Stock

Nokia Corp (ADR) (NYSE:NOK) is suing Apple Inc. (NASDAQL:AAPL) for patent infringement, and the former stock is falling yet again

Josh Selway
Dec 21, 2016 at 2:25 PM
facebook twitter linkedin


Telecom stock Nokia Corp (ADR) (NYSE:NOK) is down 2.4% today at $4.78, amid news the company is suing Apple Inc. (NASDAQ:AAPL) for patent infringement. While NOK shares have recovered some ground since their November low of $4.04, they remain nearly 32% lower year-to-date, with the $5 level stepping up as resistance of late. Today's price action is unfortunate for options traders, who have been placing bullish bets at an unusual pace in recent weeks. 

Specifically, NOK boasts a 10-day call/put volume ratio of 13.67 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This means nearly 14 call options have been bought to open for every put during the past two weeks. What's more, NOK has a Schaeffer's put/call open interest ratio (SOIR) of 0.25, revealing call open interest quadruples put open interest among options expiring within three months. This SOIR is only 5 percentage points from a 12-month low, so this heavy call-skew is beyond what's normally seen. 

This bias is carrying over into today's trading. By the numbers, NOK calls are trading at 1.5 times the intraday norm, and outpacing puts by a more than 4-to-1 margin. The January 2017 5-strike call is the most popular option overall, and if traders are buying to open positions, they're betting on the stock climbing atop $5 in the weeks ahead. 

There's also some bullish sentiment lingering in the analyst community. For instance, five brokerage firms rate the stock a "strong buy" -- though seven others call it either a "hold" or a "sell." Plus, NOK's average 12-month price target stands at $5.64, which is an 18% premium to current levels. 

Of course, Nokia Corp's (ADR) (NYSE:NOK) struggles on the charts go back farther than this year. The shares have been falling fast since peaking in the $8.70 area back in late 2014. Suffice it to say, an unwinding of the optimism in the options pits, or another round of bearish analyst attention, could weigh on the stock even more. 

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter