Nuance Communications has been a money machine for option
traders, and yesterday they wanted another payout.
optionMONSTER's Heat Seeker tracking system detected bullish call
buying in the maker of speech-recognition software on June 4, with
more than 3,000 October 18 calls purchased for $0.70. NUAN fetched
$16.33 at the time, only to surge above $19 on a report that the
company was exploring a possible sale. optionMONSTER subscribers
more than tripled their money
from the move.
Yesterday the call buying hit again. This time, some 8,800 July 21
calls crossed the Heat Seeker, eclipsing open interest of just
1,234 contracts. Most of them traded for the $0.45 ask price. More
than 2,300 July 19s and July 20s were also purchased, but volume
was below open interest in those.
lock in the price where the stock can be purchased, providing
leverage to the underlying shares. But the contracts can quickly
lose value if the stock stalls or pulls back. (See our
NUAN advanced another 2.51 percent to $19.23. It's been climbing
against heavy short interest and enjoys backing from billionaire
investor Carl Icahn. The stock is still down more than 30 percent
from its all-time high above $31 in early 2012.
Overall option volume stood at 6 times average amounts by the
closing bell yesterday. Calls accounted for a bullish 75 percent of
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