Option Players Discover Brightpoint, Inc. (CELL)

01/07/2010 12:01 am EST


Elizabeth Harrow

Director of Digital Content, Schaeffer's Investment Research, Inc.

Brightpoint, Inc. (CELL) is relatively undiscovered by speculators—among options set to expire within three months, total call and put open interest amounts to just 728 contracts. However, option volume has skyrocketed today, with call activity surging to 34 times the norm and put volume spiking to 270 times the usual level.

CELL price chartThe day's most active strike is CELL's January 2010 7.50 put, where more than 2,000 contracts have traded so far. The majority of these puts have changed hands near the ask price, suggesting they were purchased, and implied volatility has shot nearly 21% higher. Since this option currently carries open interest of just 23 contracts, it seems safe to assume that the bulk of today's volume consists of newly opened bearish bets.

Meanwhile, CELL's February 7.50 call has seen 256 contracts cross the tape on open interest of four contracts, with 65% of these calls crossing the tape at the bid price, indicating they were most likely sold. Implied volatility is up 4.1% at last check, which points to rising demand for this option. In other words, it looks like some speculators are selling calls at this strike, in hopes that CELL will remain pinned below $7.50 through February expiration.

Click to Enlarge

Today's surge in option volume was prompted by an 11.3% plunge in CELL, with the stock slipping to $6.88 at last check. The shares are getting pummeled after the company announced last night that its fourth-quarter profit would fall short of analysts' consensus expectations. CELL's current slide extends the equity's intermediate-term slump under pressure from its ten- and 20-week moving averages.

By Elizabeth Harrow of Schaeffer’s Trading Floor Blog

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