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NQ Mobile Inc (ADR) call buyers have been active in recent months
Although NQ Mobile Inc (ADR) (NYSE:NQ) has dropped 3.4% today to linger near $6.30, calls are trading at two times the intraday average, and are outpacing puts by a more than 20-to-1 margin. Traders are rolling the dice on the equity's short-term trajectory, with all of NQ's 10 most active options expiring in the next six weeks.
Most popular is the equity's December 8 call, where 6,793 contracts have changed hands. Almost all of these have traded at the ask price, and implied volatility has jumped 11.8 percentage points, hinting at the purchase of new positions.
Today's call buyers will profit if NQ is sitting north of breakeven at $8.20 (strike plus the volume-weighted average price of $0.20) at the close on Friday, Dec. 19, when the front-month series expires. Gains are theoretically unlimited north of here, while losses are capped at the initial cash outlay, should the stock close south of the strike at expiration. Delta on the call is docked at 0.22, suggesting a roughly 1-in-5 chance the option will be in the money at the end of its lifetime.
Expanding the sentiment scope reveals today's call-skewed session is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NQ's 50-day call/put volume ratio of 10.28 ranks higher than 98% of similar readings taken in the past year. With 15.5% of NQ Mobile Inc's (ADR) (NYSE:NQ) float sold short, though, a portion of this call buying could be a result of short sellers initiating hedges for their bearish bets.