NQ Mobile Inc. (NQ) Trader Takes Aim at an Elusive Mark

NQ Mobile Inc (ADR) (NYSE:NQ) has not traded north of $4.50 since early January

by Karee Venema

Published on Apr 21, 2015 at 11:34 AM
Updated on Jun 24, 2020 at 10:16 AM

NQ Mobile Inc (ADR) (NYSE:NQ) has spent almost the past two weeks trading north of the $4 mark, suggesting this former layer of resistance may now be switching to a more supportive role. In today's trading, one optimistic options trader is betting on a bigger breakout over the next two weeks, and is taking aim at the $4.50 mark.

Specifically, 84% of NQ's total intraday volume occurred when a block of 1,999 weekly 5/8 4.50-strike calls changed hands earlier. It appears this lot of out-of-the-money calls was bought to open, with the goal being for the equity to rally north of $4.50 by next Friday's close, when the weekly series expires. Considering NQ hasn't seen the north side of $4.50 since early January, delta on the call is docked at 0.34, suggesting a roughly 1-in-3 chance of an in-the-money finish.

From a wider sentiment perspective, today's call-skewed session just echoes the withstanding trend. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NQ's 20-day call/put volume ratio is docked at 12.12. Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.47, which ranks lower than 64% of all similar readings taken in the past year. In other words, short-term speculators are more call-heavy than usual. With 18.3% of the equity's float sold short, though, some of this could be a result of shorts hedging their bearish bets.

As noted, NQ was able to break above previous resistance earlier this month. In today's trading, the stock is flat at $4.14, following news of a management shake-up. Specifically, co-CEO Omar Khan will resign from his post on May 1. Going forward, NQ Mobile Inc (NYSE:NQ) will no longer use the co-CEO system.


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