Call Volume Explodes Ahead of BlackBerry Earnings

By Karee Venema / December 19, 2017 / www.schaeffersresearch.com / Article Link

BlackBerry Ltd (NYSE:BB) will report earnings tomorrow morning, and ahead of the big event, BB stock is trading down 0.5% at $10.89. The stock gapped more than 13% higher following the company's last earnings report in late September -- when it was still trading under the ticker "BBRY" on the Nasdaq -- and options traders are betting on more of the same this time around.

At last check, 51,458 calls and 5,055 puts had traded on BB -- nearly six times what's typically seen at this point in the day. The January 2018 11-strike call is most active with 22,151 contracts traded. Trade-Alert indicates new positions are being purchased here, though some of the activity could be tied to stock.

A little further down the list, speculators appear to be buying to open the weekly 12/22 12-strike calls. If this is the case, they expect BB to break out above $12 by options expiration at this Friday's close. Based on the stock's current perch, another post-earnings move like last quarter's would put the shares near $12.31 -- territory not charted since January 2015.

Looking closer at the charts, BB has had a standout year -- up 57.9% so far, and pacing toward its best annual return since 2009. And while the stock pulled back sharply from June through August, a strong bounce off its rising 160-day trendline helped send BlackBerry to a two-year high of $11.78 in mid-October. A more recent rally off its 80-day moving average has the equity once again eyeing multi-year highs.

A round of short-covering could certainly supply the fuel for an extended surge, too. There are currently 46.75 million BB shares sold short, representing 18.4 times the stock's average daily pace of trading.

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