M&A Rumors Bring Out BlackBerry Limited (BBRY) Bulls

BlackBerry Ltd (NASDAQ:BBRY) calls are trading well above their average intraday rate

by Josh Selway

Published on May 11, 2015 at 1:04 PM
Updated on Jun 24, 2020 at 10:16 AM

Call-focused traders are flooding BlackBerry Ltd's (NASDAQ:BBRY) options pits, apparently in response to unsubstantiated takeover rumors. The contracts are changing hands at five times the normal intraday pace, as the May 10 call leads the way. Over 10,600 contracts have been exchanged here, and it looks like some traders are buying to open the contracts in hopes the shares will extend their gains beyond $10 by week's end, when the options expire. Based on the equity's Schaeffer's Volatility Index (SVI) of 35% -- only 2 percentage points from an annual low -- BBRY's short-term options can be had at a bargain price, from a volatility standpoint.

On a long-term basis, BBRY has been strong, adding nearly 37% in the past year. Today, the stock is enjoying a 3.1% lift to trade at $10.18.

Even so, put buying has been popular of late at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Across these exchanges, BBRY sports a 10-day put/call volume ratio of 0.41, which outranks 73% of all readings from the past year.

And then there's short interest. The nearly 94 million BlackBerry Ltd (NASDAQ:BBRY) shares sold short would take over seven sessions to repurchase, at the smartphone maker's average daily volumes. If BBRY can extend its technical success, a reversal of trader sentiment -- in and out of the options pits -- could spell tailwinds.


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