NUAN Call Options Active Ahead of Earnings Report

NUAN – Nuance Communications, Inc. – Near-term call options on the software company are active today with the release of the firm’s second-quarter earnings close at hand. Nuance’s shares declined 1.90% by 12:35 pm ET to stand at $17.10. Investors appear to be both buying and selling out-of-the-money calls today in order to prepare for the earnings report after the market closes on Monday August 9, 2010. Some traders appear to be making bullish bets, buying approximately 2,200 August $17.5 strike calls at an average premium of $0.53 each. Call buyers make money if NUAN’s shares rally 5.4% over the current price of $17.10 to trade above the average breakeven point on the upside at $18.03 by August expiration day. Other investors sold 2,200 calls at the same August $17.5 strike for an average premium of $0.53 each. Call sellers keep the premium received on the sale of the calls as long as Nuance Communications’ shares fail to exceed $18.00 by expiration. NUAN’s shares last traded above $18.00 back on May 5, 2010.

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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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