BlackBerry Limited (BBRY) Dip Draws Bearish Attention

Options traders and analysts are both skeptical of BlackBerry Ltd (BBRY)

by Alex Eppstein

Published on May 5, 2015 at 1:56 PM

BlackBerry Ltd (NASDAQ:BBRY) puts have been the options of choice for a while now. The stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio is 0.51, which ranks in the bearishly skewed 97th percentile of its annual range.

There's plenty more skepticism where that came from. In fact, among the 19 analysts tracking BBRY, 16 rate it a "hold" or worse. Also, nearly one-fifth of the security's float is sold short, which represents more than seven sessions' worth of pent-up buying demand, at the stock's average daily trading volume.

Pessimism is prevailing today, as well. Roughly 11,000 puts are on the tape -- a 70% mark-up to the average intraday amount, and outdistancing calls by a 4,000-contract margin. Most active is the in-the-money June 12 put, where it seems traders are purchasing new positions. By scooping up these puts at a volume-weighted average price (VWAP) of $2.01, the buyers foresee BBRY settling below $9.99 (strike less VWAP) at the close on Friday, June 19, when the back-month options expire.

BlackBerry Ltd (NASDAQ:BBRY) is currently sitting south of that breakeven point, off 2.4% at $9.91 amid broad-market headwinds. However, the stock remains a long-term outperformer, adding 29% year-over-year. If BBRY bounces from its underfoot 10-week moving average -- located at $9.85 -- an unwinding of the aforementioned pessimism could result in tailwinds.


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