Nokia Options (NOK): Unusual Trading Activity
Options in mobile device company Nokia (NOK) experienced some of the biggest trades of the day yesterday into the close betting that last month’s lows will not be broken.
NOK surged 8.6% yesterday to $3.35, and has more than doubled from its 15-year low of $1.63 in July.
The stock is now at its highest level since early May.
What’s interesting is that our tracking systems detected the sale of 15,000 NOK April $1.50 puts for the bid price of $0.14. That works out to $210,000 in premium received.
All of these trades were against open interest of just 20 contracts. So, a new position was clearly initiated.
Now if NOK remains above $1.50 a share by September expiration, this trader will walk home with a lot of money in his pocket.
It’s seems quite obvious this option buyer believes Nokia stock is going to hold at these levels despite a possible broad market pullback on global and domestic growth concerns.
However, what’s going on with this mobile device company that would make a trader lay out a bet on such a low priced stock?
Before we get to that, here’s a little information on the company…
If you don’t already know, Nokia is the world’s largest manufacturer of mobile devices and a leader in mobile network equipment and software.
The company’s mobile phones provide consumers with experiences in voice, video, gaming, navigation, imaging, and music. And through its 50%-owned Nokia Siemens Networks joint venture, the company provides equipment and services to network operators, service providers, and corporations.
Now back to this enormous investment on the bullish side…
Nokia is in a much stronger position to survive with devices based on the Windows Phone platform than if it had stayed with Symbian and MeeGo. These were the old outdated platforms on which their systems operated.
Nokia still enjoys the leading market share in mobile phones, fueled by demand for its inexpensive basic phones in global areas with price sensitive consumers.
Lastly, Microsoft, AT&T, and Nokia are all investing heavily in promotional activity to drive the adoption of the Lumia 900, providing a reasonable shot at success. The Lumia 900 is Nokia’s first high-end LTE smart phone to hit the market.
The upshot of all of this is…
Option traders believe there’s a unique opportunity to take advantage of a low priced stock with inexpensive options. By selling puts on Nokia, they have a chance to make serious profits even if NOK goes nowhere here.
We’ll see how it all plays out!
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Safe Trading,
Marcus Haber
Category: Unusual Options Trading Activity
