Nothing subtle in Nuance returns

Bullish traders have scored big in Nuance, thanks to a strong earnings report this week.

On May 3, Investitute’s tracking programs showed that 2,100 May $18 calls were purchased for $0.55 to $0.57. Open interest in the strike was only 846 contracts before that session began, indicating that this was new positioning. Stock $17.86. EPS 5/9 after close.

Today those calls traded for $1.32, more than doubling in value barely one week later. The stock rose 7.8 percent that same time frame, illustrating the kind of leverage that can be achieved through options.

Long calls lock in the price where the stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

NUAN fell 2.35 percent to $19.11 today. The company, which makes voice-recognition software for mobile phones and other devices, beat quarterly estimates on the top and bottom lines after the market closed on Tuesday.

For more information on Unusual Option Activity, visit this page.


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