Nostalgic telecommunications company Nokia Corporation (NYSE: NOK) is back in the good graces of retail traders today. The shares are surging nearly 12% at writing and trading volume is ascending rapidly.
Nokia said it plans to raise its full-year guidance following a strong second-quarter performance. The company is expected to announce the updated numbers on July 29 during its second-quarter earnings call.
But even without any actual numbers, r/WallStreetBets is notably excited about the news. Traders have been loading incredible sums of long-dated $NOK call options since the end of last year. More than $100 million in premium was sitting on the $NOK options chain for several months, and now it seems we have a clearer idea as to what those calls were betting on.
Nokia Stock Rallies on Strong Earnings
Nokia surprised many with their Q1 results in April, beating analyst estimates by 8x. Net sales were up 9% and gross margin was up 37.8%. They also disclosed a net cash position of EUR 3.7 billion ($4.4 billion USD) and a comparable operating margin of 8.5%.
Now traders are anxiously awaiting Nokia’s Q2 results. If updated guidance beforehand is any meaningful indication, Q2 could be yet another blowout for the company as 5G gains steam. How Nokia stock reacts to the report remains to be seen.
The announcement of an upcoming smartphone has also caught traders’ interest. Nokia has been mostly out of the phone manufacturing business for years, but a rugged version of the company’s X20 seems to be on the horizon, amplifying recent fascination with Nokia stock.
Furthermore, retail traders have enthusiastically pointed out that Nokia has a contract with NASA to build fiberoptics on the moon, giving a whole new level of accuracy to the WSB mantra of “to the moon!”
Nokia Stock Draws Enormous Options Bets
As the earnings trend continues upwards for the company, traders keep pressing their leverage on the options chain. Today, the 1/22/21 $5 calls are 250% more expensive than they were in April, while the share price is up just under 50% in the same period.
And now the volume is beginning to pour in on calls expiring on 8/20/21. This is most likely traders positioning themselves to have some time left on their contracts after the Q2 earnings call, in case Nokia stock goes on a tear.
The open interest also remains astronomical on longer-dated $NOK calls, signaling that big-picture bulls see plenty of upside remaining in the stock before January rolls around.
All this to say, $NOK is a relatively under-hyped retail favorite with a ton of options bets behind it.
Traders tend to put their money where their mouths are, and there’s a very large amount of money riding on Nokia stock.
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