Pre-Earnings Option Bears Bombard NQ Mobile Inc (ADR) (NQ)

NQ Mobile Inc (ADR) is tentatively scheduled to report earnings later this month

by Karee Venema

Published on Dec 9, 2014 at 1:20 PM
Updated on Apr 20, 2015 at 5:32 PM

NQ Mobile Inc (ADR) (NYSE:NQ) is down 6% today to test its footing atop the $6 mark. Against this backdrop, puts are seeing a rare uptick in volume, and are trading at nearly four times the intraday average. Drilling down, a number of speculators are betting on a steeper retreat through month's end -- a time frame which possibly includes the company's next turn in the earnings confessional.

Specifically, NQ's weekly 12/26 6.50-strike put has seen the most action, with 1,453 contracts on the tape. All of these puts have gone off on the ask side, implied volatility is higher, and only 17 contracts are currently in residence here, making it safe to assume new positions are being purchased.

Based on NQ's present perch at $6.12, these puts are in the money. However, in order for traders to profit, the stock must be sitting south of breakeven at $5.58 (strike less the volume-weighted average price of $0.92) at the close on Friday, Dec. 26, when the series expires. Risk, meanwhile, is limited to the initial premium paid, should NQ settle north of the strike at expiration.

As touched upon, NQ Mobile Inc (ADR) (NYSE:NQ) is tentatively slated to report earnings between Dec. 12 and Dec. 16. This could be potentially good news for today's put buyers, considering NQ plunged nearly 21% in the session subsequent to its mid-April quarterly earnings report.


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