Call Buying Rampant as Nokia Corporation (NOK) Pops

Nokia Corporation (ADR) (NOK) traders see upside ahead

by Griffin Kruse

Published on Apr 10, 2015 at 2:02 PM
Updated on Apr 20, 2015 at 5:32 PM

Nokia Corporation (ADR) (NYSE:NOK) is rallying today, up 4% to hover near $8.04 amid speculation over a possible M&A deal for its maps business. As a result, NOK options bulls have been active, with some traders betting on short-term upside for the equity.

Drilling down, NOK calls are moving at 23 times the average intraday rate, and are outpacing puts by a roughly 14-to-1 margin. The day's most active option by far is the April 8 call, where apparent buy-to-open activity is taking place. By purchasing this call at a volume-weighted average price (VWAP) of $0.14, the buyers will profit if the shares of NOK muscle their way above $8.14 (strike plus VWAP) by the close on Friday, April 17, when the contract expires.

Today's penchant for calls mirrors recent trends in the options pits. Over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 19.46 NOK calls have been bought to open for every put, which is a higher ratio than 77% of all equivalent readings taken over the past year. Traders are paying relatively modest prices for their short-term bets on NOK, as its Schaeffer's Volatility Index (SVI) of 25% ranks in the 10th percentile of its annual range.

Elsewhere, a sizeable portion of the brokerage bunch is skeptical of NOK. Of the 12 analysts covering Nokia Corporation (ADR) (NYSE:NOK), seven rate it a "hold" or "strong sell." However, with the stock pinned in a sideways channel between $7 and $8 for the better part of the last 18 months, it's no surprise that skepticism reigns among analysts.

Daily Chart of NOK Since October 2014

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