Buyer thinks Sony will be the next RIMM
David Russell | [email protected]
optionMONSTER's Heat Seeker tracking system detected the purchase of more than 5,000 January 11 calls for $0.15 yesterday. Most of the activity took place in about 5 minutes, suggesting that it was the work of a single investor.
The long calls lock in the price where shares can be bought in the once-mighty Japanese electronics firm. These options were particularly inexpensive and have the ability to provide huge leverage in the event of a rally, but they will expire worthless if the stock doesn't move by mid-January. (See our Education section)
SNE rose 3.44 percent to $10.23 yesterday. The stock has been trending lower for the last five years and has lost more than half its value since mid-March. That selloff has brought the stock back to its lowest levels since 1987, and yesterday's call buyer apparently thinks that it's ready to rebound.
Other big tech stocks recently have made similar moves. Hewlett-Packard and Dell have handed traders gains of 300 percent in recent weeks, while Research In Motion has generated even bigger profits. All three of those stocks had fallen to long-term lows before they pushed higher.
SNE also trades for about half of book value and has little net debt, which could make some investors think that it's now a safe bet.
Total option volume in Sony was more than triple its daily average, with calls outnumbering puts by a bullish 24 to 1.
(A version of this post appeared on InsideOptions Pro yesterday.)