Puts Active on Nokia (NOK) in Face of Microsoft (MSFT) Deal Delay

According to option volume data bearish put plays featured almost 2.5-times more than bullish call volume during Monday morning trading as the Finnish-handset maker announced delays amongst Asian regulators that would likely hamper its $5.4 billion handset deal with Microsoft Corp. (MSFT) The deal could reshape Nokia’s business model and enhance Microsoft’s mobile business and has been given the thumbs-up by 15 markets. However, Nokia (NOK) said Monday that China has not yet signed-off on its plan to sell its mobile devices businesses and patents to Microsoft, potentially pushing closure to April. As a result, investors are factoring delays to the timetable for its new strategy with its expected focus on competing in the wireless networks industry. For now it means that Nokia is saddled for longer with its mobile unit, though its announced jettison to Microsoft was widely welcomed amongst investors.

Overall option volume of 78,600 contracts was met with relative stability in the value of its shares, which eased by just 0.14% to $7.15. Amongst the most active strikes on Monday was the July 6.0 strike where it appears some 20,000 contracts were bought at a premium of 28-cents. Delay to the pending transaction was perhaps sufficient to prod an investor into paying a premium in order to protect against a decline in the share price. Beyond the announcement of the agreement six months ago, shares surged from $3.75 to $8.25 and even on a pullback have failed to fall as low as the $6.00 strike price since.

Chart – Nokia buyers may be taking advantage of July puts

(click to enlarge)

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.