NQ Mobile Inc. (NQ) Call Buyers Bank On a Breakout

Call buyers foresee additional gains ahead for NQ Mobile Inc (ADR) (NQ)

by Alex Eppstein

Published on May 27, 2015 at 2:47 PM
Updated on Jun 24, 2020 at 10:16 AM

NQ Mobile Inc (ADR) (NYSE:NQ) is up 7.3% at $4.13, rallying along with the broader tech sector. About 23,000 calls are on the tape -- 13 times the average afternoon amount, and triple the number of puts exchanged -- with the June series garnering attention.

Specifically, NQ's June 4 and 4.50 calls are being bought to open, as speculators are confident the stock will extend its run higher through the close on Friday, June 19, when front-month options expire. The volume-weighted average price (VWAP) on the lower-strike call is $0.35 -- yielding a breakeven mark of $4.35 (strike plus VWAP) -- while the VWAP on the higher-strike call is $0.19, resulting in a breakeven of $4.69.

This call-buying trend has been prominent over the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, NQ's 50-day call/put volume ratio across those exchanges is 6.17 -- higher than four-fifths of comparable readings from the previous year.

This optimism is fairly surprising, considering NQ Mobile Inc (NYSE:NQ) has been range-bound in recent months. Since mid-January, the stock has churned between $3.50 and $4.50.

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