Options Brief: Nokia Corp. (NOK)

NOK – Nokia Corporation – Bullish action in Nokia LEAPS pushed the mobile communications company onto our scanners this afternoon. Nokia’s shares ticked up 1.25% to $8.93 by 2:40 pm (ET). Investors expecting the price of the underlying stock to appreciate significantly by expiration in January 2012 purchased debit call spreads. Traders purchased 7,000 in-the-money calls at the January 2012 $7.5 strike for an average premium of $2.72 each, and sold the same number of calls at the higher January 2012 $12.5 strike for an average premium of $0.82 a-pop. Investors paid an average net cost of $1.90 per contract for the transaction and are poised to profit should Nokia’s shares rally 5.25% over the current price to surpass the average breakeven point on the spread at $9.40 by expiration day. Call spreaders are positioned to accrue maximum potential profits of $3.10 per contract as long as NOK shares jump 40.00% to exceed $12.50 by expiration in January 2012. Nokia is scheduled to report second-quarter earnings ahead of the opening bell on Thursday.

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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.

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