Nokia Corporation (NOK) Stumble Doesn't Shake Option Bulls

Calls are easily outpacing puts on Nokia Corporation (ADR) (NYSE:NOK) today, despite the stock's 11% post-earnings drop

Apr 30, 2015 at 1:09 PM
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Nokia Corporation (ADR) (NYSE:NOK) is down 10.8% this afternoon at an annual low of $6.68 -- and on the short-sale restricted list -- after the telecom concern's first-quarter profit miss raises eyebrows over its planned purchase of Alcatel Lucent SA (ADR) (NYSE:ALU). Options traders are keeping the faith, though, with calls crossing at two times the average intraday rate, and outpacing puts by a 6-to-1 margin.

Diving deeper, the equity's May 8 call has seen the most action today, and it appears some of the activity could be of the buy-to-open kind. By initiating these long calls, traders expect NOK to rally through the the $8 mark by the close on Friday, May 15 -- when front-month options expire.

Today's accelerated call activity is nothing new for NOK. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 17.66 ranks in the 93rd annual percentile. In other words, calls have been bought to open over puts with more rapidity just 7% of the time within the past year.

Elsewhere on the Street, sentiment is more mixed toward a stock that -- until today -- had spent the majority of the past seven months in a tight trading range. Nine out of 13 analysts, for example, maintain a "hold" or "sell" recommendation on Nokia Corporation (NYSE:NOK). However, the average 12-month price target of $9.45 sits in territory not charted since February 2011.

 

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