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Bottom fishing in Sony

Sony is trying to bottom out, and buyers are looking for a bounce.

optionMONSTER's Heat Seeker tracking system detected two flashes of upside activity in the Japanese electronics giant, which is sitting at its lowest prices since March 2009. On Wednesday, an even 5,000 October 26 calls were purchased for $0.23, but the stock continued to fall. The bulls came back two days later, snapping up more than 8,000 October 23s for $0.55 and $0.60.

The activity was unusual for SNE, which normally trades fewer than 2,000 contracts in an average session. It reflects a belief that the stock is due for a bounce after losing 44 percent of its value in the last six months. Shares fell another 0.77 percent to $20.53 on Friday.

SNE is grappling with the fallout of the March earthquake and tsunami, followed by a surge in the Japanese yen in the last month. The stronger currency reduces the value of its exports and threatens to squeeze profits.

Management cut its full-year earnings guidance to 60 billion yen from 80 billion yen the last time it issued results on July 28. The stock is now trading at a deep discount to its book value, and its enterprise value is just 4 times EBITDA, which could potentially attract value investors.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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