BlackBerry Ltd (BBRY) Call Buyers Undaunted by Losses

BlackBerry Ltd's (NASDAQ:BBRY) post-earnings death spiral continues, once again brought on by a round of negative analyst notes. Overnight, Sterne Agee CRT initiated coverage on the stock with a "neutral" rating and $6 price target, while Imperial Capital and RBC cut their respective price targets to $7 and $8. At last check, BBRY is off 4.3% at $6.03, and earlier flirted with an annual low of $5.96.

The bearish trend -- and perhaps some new competition from Google Inc (NASDAQ:GOOGL) -- has sent put volume to 1.6 times the expected intraday rate. However, the most active option is the at-the-money weekly 10/2 6-strike call, which traders are buying to open for a volume-weighted average price (VWAP) of $0.30. In other words, breakeven at this Friday's close -- when the weekly series expires -- is $6.30 (strike plus VWAP).

BBRY calls have been surprisingly popular in recent months, despite the equity's prolonged pain on the charts. Specifically, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.11 ranks in the 96th percentile of its annual range -- with more than five calls bought to open for each put.

Echoing this, BBRY's Schaeffer's put/call open interest ratio (SOIR) stands at 0.32, with call open interest tripling put open interest among options expiring in the next three months. To put that in perspective, the stock's SOIR has been lower just 13% of the time in the past 12 months. Peak call open interest in the front-month series sits at the out-of-the-money October 9 strike, with more than 8,900 contracts in residence.

It's worth mentioning that BlackBerry Ltd (NASDAQ:BBRY) call buyers are not necessarily bullish. A lofty 18.8% of the stock's float is sold short -- representing nearly three weeks of trading, at typical volumes. In other words, it's possible short sellers may be purchasing out-of-the-money calls to act as protection.