Takeover Chatter Fuels Bullish Betting On BlackBerry Limited (BBRY)

BlackBerry Ltd (BBRY) hit an intraday peak of $10 earlier

by Karee Venema

Published on Mar 11, 2015 at 1:59 PM
Updated on Apr 20, 2015 at 5:32 PM

BlackBerry Ltd (NASDAQ:BBRY) is up 0.6% today at $9.83, amid renewed buzz of a potential Samsung bid. In the options pits, calls have emerged as the contracts of choice, and are outpacing puts by a more than 14-to-1 margin -- with a number of speculators rolling the dice on a move to double-digits by week's end.

Specifically, BBRY's weekly 3/13 10-strike call is easily the most active option, with 8,500 contracts on the tape -- roughly 43% of the equity's total intraday call volume. It appears the majority of the action is of the buy-to-open kind, as traders bet on BBRY to topple the strike by Friday's close, when the weekly series expires. Earlier, the security topped out at an intraday peak of $10, and was trading north of this mark as recently as last Friday.

From a wider sentiment perspective, it's been option bears that have been upping the ante in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio has grown to 0.31 from 0.20 since the start of the month, and now ranks in the 67th annual percentile. Simply stated, puts have been bought to open over calls at a faster-than-usual clip.

This skepticism is witnessed elsewhere on the Street, as well. Short interest, for example, accounts for 18.3% of the equity's available float, while 84% of covering analysts maintain a "hold" or worse suggestion toward the stock. Should BlackBerry Ltd (NASDAQ:BBRY) extend today's positive price action, a continued shift in sentiment could help buoy the shares.


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