Shares of BlackBerry Limited (BB 1.02%) -- the one-time smartphone maker, now security software specialist -- climbed steadily throughout the trading day Friday, ultimately ending with a 10.8% gain by the closing bell.
There doesn't appear to be any obvious news behind the stock's rally today, except for one thing: According to data from TheFly.com, options activity was unusually bullish in BlackBerry trading today, with 20% more call options being purchased than usual. This is a bullish signal because the buying of "calls" permits a contract buyer to force a contract seller to sell the stock at a certain price up to a set time in the future.
Options traders buy calls, of course, when they expect a stock to go up -- the idea being to gain the right to purchase shares at a price below where the stock's market price ends up. In the case of BlackBerry, the ratio of calls to puts (options that confer the right to sell the stock at a set price -- a bearish bet) trading today was 10-to-1 -- and that seems very bullish indeed, or at least shows great optimism on the part of options traders.
What has those traders so excited? Well, BlackBerry is expected to report its fourth-quarter earnings on March 31. Analysts have the stock pegged for only $0.03 per share in earnings for the quarter, for a 67% decline year over year, and a 15% decline in sales (projected to be $246.4 million).
If either of those numbers turns out to be less bad than anticipated -- or if BlackBerry even just gives good guidance for the quarter coming up (when analysts expect to see earnings per share of only $0.01), then the folks buying BlackBerry options today could turn a tidy profit a couple of weeks from now.