OptionsHouse

Options Trading News

March 8, 2013  Fri 4:14 AM CT

NUAN: SEE CHART GET CHAIN FIND STRATEGIES
Nuance Communications is trying to hold above some long-term lows, and yesterday the bulls wagered on a bounce.

optionMONSTER's Heat Seeker system detected unusual activity in the July 19 calls, with buyers paying $1.65 to $1.70. Those premiums quickly inflated to $1.95 as shares began ticking higher, which shows the kind of leverage that can be achieved with options.

Such long calls lock in the purchase price for the stock, so even a small move in the share price can have a big impact on the value of the options. (See our Education section)

NUAN was down slightly when the trades first hit but ended the session up 0.74 percent to $19.02. The maker of voice-recognition software has lost more than 20 percent in the last month, with most of that drop following a weak earnings report on Feb. 7.

More than 8,300 of those July 19s traded in the session, almost 10 times the strike's open interest before the session began, clearly indicating new activity. Calls outnumbered puts by a bullish 14-to-1 ratio.

(A version of this post appeared on InsideOptions Pro yesterday.)
Share this article with your friends


OptionsHouse

Premium Services

Archived Webinar

Education & Strategy

Real vs. Synthetic

We now know that there are two ways of creating a call position, a put position, and a stock position. We can simply use the actual real security or we can recreate it synthetically. We can create these positions in both long and short forms and this ability sets up an interesting scenario--an arbitrage!

View more education articles »