Puts Popular as NQ Mobile Inc. (NQ) Pans New Lows

NQ Mobile Inc (ADR) (NQ) bottomed out at a new all-time low today

by Karee Venema

Published on Jan 29, 2015 at 1:14 PM
Updated on Apr 20, 2015 at 5:32 PM

Similar to fellow China-based stock Alibaba Group Holding Ltd (NYSE:BABA), NQ Mobile Inc (ADR) (NYSE:NQ) is heading south today -- down 3.3% at $3.49, after earlier bottoming out at a new record low of $3.22. As such, the stock has been placed on the short-sale restricted list, and put volume is running at 1.8 times the average intraday pace, as traders look for alternate ways to bet bearishly on the security.

Most active is NQ's February 3 put, with all signs suggesting new positions are being purchased. By buying the puts to open, traders are expecting NQ to extend its trek into all-time-low territory, and breach the $3 mark by the close on Friday, Feb. 20 -- when front-month options expire.

Today's accelerated put activity marks a change of pace in the equity's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NQ's 10-day call/put volume ratio of 4.72 ranks higher than 67% of similar readings taken in the past year. In other words, calls have been bought to open over puts at a faster-than-usual clip in recent weeks.

With nearly 19% of the stock's float sold short, though, a portion of this call buying may have been at the hands of short sellers picking up some insurance against any unexpected upside. However, in addition to today's swoon, NQ Mobile Inc (NYSE:NQ) has been trending steadily lower over the past 11 months. In fact, since hitting an annual high of $22.33 in late February, shares of NQ have shed more than 84% of their value.


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