NQ Mobile Inc. (NQ) Option Trader Ups the Bullish Ante

NQ Mobile Inc's (ADR) (NQ) January 2016 calls are in focus today

Jan 12, 2015 at 1:25 PM
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Although NQ Mobile Inc (ADR) (NYSE:NQ) is down 2% today amid broad-market headwinds, calls are trading at almost seven times the average intraday rate, and are outpacing puts by a more than 62-to-1 margin. Drilling down, nearly all of the day's action has centered on two strikes, and it appears one speculator is upping the bullish ante on her long-term outlook.

Specifically, four blocks totaling 40,000 contracts changed hands at NQ's January 2016 4- and 5.50-strike calls. According to Trade-Alert, the lower-strike calls were sold to close, while the higher-strike calls were bought to open. In simpler terms, this trader apparently rolled her bullish bet up, expecting shares of NQ to topple $5.50 by January 2016 options expiration.

Widening the sentiment scope reveals today's accelerated call activity is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, NQ's 10-day call/put volume ratio of 9.79 ranks in the 88th percentile of its annual range. With nearly 19% of the stock's float sold short, though, a portion of the recent call buying may be a result of short sellers hedging their bearish bets.

Technically speaking, NQ Mobile Inc (ADR) (NYSE:NQ) has been a long-term laggard, and is currently staring at a 69% year-over-year deficit to churn near $4.36. More recently, the security has spent 2015 sandwiched between support at its 10-day moving average and resistance at its 20-day trendline.

Daily Chart of NQ Since December 2014 With 10- and 20-Day Moving Averages
 

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