Pre-Earnings Bears Key In On Nokia Corporation (ADR) (NOK)

Nokia Corporation (ADR) is slated to step into the earnings confessional tomorrow morning

by Digital Content Group

Published on Oct 22, 2014 at 2:13 PM
Updated on Jun 24, 2020 at 10:16 AM

Nokia Corporation (ADR) (NYSE:NOK) is off 2.4% this afternoon to hover near $7.97. Meanwhile, options are flying off the shelves -- especially on the put side, where volume is running at nearly seven times the usual intraday pace.

Looking more closely, NOK's most active option by a slim margin is the weekly 10/24 8-strike put, where 11,166 contracts are on the tape. Almost all have crossed at the ask price, implied volatility has spiked 34.1 percentage points, and volume outstrips open interest. All in all, it seems safe to assume new bearish bets are being initiated at this at-the-money strike.

By buying these puts to open at a volume-weighted average price (VWAP) of $0.22, the traders are banking on NOK to descend below $7.78 (strike minus VWAP) by week's end, when the contracts expire. Gains will accrue on a move all the way down to zero, while potential losses are capped at the initial premium paid, should the stock finish the week at or above $8.

Most likely, today's put buyers are eagerly anticipating tomorrow morning's third-quarter earnings report from Nokia Corporation (ADR) (NYSE:NOK). If past predicts future, the event could assist in pressuring the shares lower. Over the previous eight quarters, NOK has averaged a single-session post-earnings loss of 1.1%.


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