Big Call Spread Trades On NQ Mobile

A sizable call spread initiated on mobile Internet services provider NQ Mobile Inc. (Ticker: NQ) today suggests one options market participant may be positioning for the stock to rebound during the second half of 2014 following dismal performance during the first six months of the year. Shares in NQ Mobile are down more than 7.0% today at a new 52-week low of $5.90 and have dropped nearly 75% since the end of February.
The bulk of the more than 59,000 options contracts that have traded on NQ Mobile so far today are tied up in a December expiry call spread in which one trader appears to have purchased 18,000 of the 7.0 strike calls against the sale of the same number of 12.0 strike calls. The trade cost a net $1.00 per contract to put on, and starts making money above a breakeven share price of $8.00. The bull call spread may generate maximum possible profits of $4.00 per contract at expiration in December if shares in NQ more than double to $12.00. NQ shares last traded above $12.00 in May.