Options Traders Predict Nuance Communications, Inc. (NUAN) Recovery

Traders expect Nuance Communications Inc. (NUAN) to recover from today's slide

by

Published on Jan 9, 2015 at 11:48 AM
Updated on Apr 20, 2015 at 5:09 PM

Nuance Communications Inc. (NASDAQ:NUAN) is off 3.3% today, due to a downgrade to "sell" from "neutral" at Goldman Sachs. The stock touched a 52-week low of $13.40, and was last seen at $13.57, yet some options traders remain optimistic.

While puts are crossing the tape at 21 times typical intraday volume, much of this activity can be attributed to one trader who sold to close 20,000 February 13 puts in one large block, making this strike the most active of all NUAN contracts today. However, the next most active strike is the February 15 call, with data pointing to buy-to-open activity. These traders are expecting a quick rebound for NUAN, looking for it to eclipse the $15 mark -- territory last charted on Dec. 8 -- before the close on Friday, Feb. 20, when back-month options expire.

On the charts, the stock has been pressured lower by its 20-day moving average, which, at $14.14, could act as a roadblock between the stock and the $15 level. From a broader perspective, NUAN has underperformed the S&P 500 Index (SPX) by 8.5 percentage points in the past 60 sessions.

More negative analyst attention could also threaten Nuance Communications Inc.'s (NASDAQ:NUAN) rebound effort. The stock's consensus 12-month price target of $18 stands in a region not explored since mid-August, and represents expected upside of 32.6% from NUAN's current perch.


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