Call Buyers Can't Quit NQ Mobile Inc. (NQ)

Long calls continue to be popular on NQ Mobile Inc (ADR) (NYSE:NQ)

Jun 3, 2015 at 1:51 PM
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NQ Mobile Inc (ADR) (NYSE:NQ) is in rally mode today, with some crediting a round of short covering. Regardless of the reason, the stock is up 11.7% at $5.07, and speculators are flooding the equity's options pits. Overall volume is running at four times the average intraday pace, with calls having the slight edge over puts.

While it appears one block trader may have bought to open a 3,000-contract lot of January 2017 2-strike puts -- NQ's most active option -- shorter-term traders are targeting the stock's June 4.50 call. It looks like new positions are being purchased at this now in-the-money strike, meaning speculators expect the stock to extend today's surge through the close on Friday, June 19 -- when front-month options expire.

More broadly speaking, call buyers have been dominating NQ's option pits in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 7.28 ranks in the 87th annual percentile. With 18% of the equity's float sold short, though, some of this call buying -- particularly at out-of-the-money strikes -- could be a result of shorts hedging their bearish bets.

On the charts, NQ has been breaking out recently -- more than likely to the delight of last week's option bulls -- which may have prompted some short sellers to jump ship. Specifically, NQ Mobile Inc (ADR) (NYSE:NQ) is up almost 51% since hitting its most recent low of $3.36, and is on track to close north of its 160-day moving average for just the second time since April 2014.
 

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