Nuance Bulls Look for a Bounce
Nuance Communications is trying to hold some long-term lows, and yesterday the bulls wagered on a bounce.
OptionMonster's tracking programs 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.
Nuance shares were 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.
—By CNBC Contributor David Russell
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David Russell is a reporter and writer for OptionMonster. Russell has no positions in NUAN.