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What's behind the call volume in NQ Mobile

Chris McKhann (chris.mckhann@optionmonster.com)

Call volume surged in NQ Mobile yesterday, but it wasn't a bullish trade.

optionMONSTER's tracking systems show volume of almost 103,000 contracts yesterday, with a single transaction accounting for almost all the activity. A block of 42,000 January 8 calls were bought for $1.44 against open interest of 42,936. An equal number of the 7 calls were sold at the same time for $1.80, but volume was below previous positioning in those.

There are two possible explanations for the trade: a new credit-spread or a short-call roll. In either case, the investor is looking for NQ to close below $7 early next year. If it was a short-call roll, it was probably done against long stock as a covered call. (See our Education section.

NQ finished the day at $7 even, up 6.87 percent. It touched a low of $3.45 two weeks ago and is down from $20 in March.

Total option volume was 3 times greater than average in the session.

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