Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6516
    -0.0020 (-0.31%)
     
  • OIL

    83.13
    +1.78 (+2.19%)
     
  • GOLD

    2,239.40
    +26.70 (+1.21%)
     
  • Bitcoin AUD

    108,148.12
    +2,692.49 (+2.55%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6039
    +0.0009 (+0.14%)
     
  • AUD/NZD

    1.0905
    +0.0025 (+0.23%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,251.07
    -29.77 (-0.16%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,776.20
    +16.12 (+0.04%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     

Options Traders Expect Huge Moves in Nuance Communications (NUAN) Stock

SNE vs. DLB: Which Stock Is the Better Value Option?

Investors in Nuance Communications, Inc. NUAN need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 19, 2018 $35.00 Call had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for Nuance Communications shares, but what is the fundamental picture for the company? Currently, Nuance Communications is a Zacks Rank #2 (Buy) in the Computer - Software industry that ranks in the Bottom 38% of our Zacks Industry Rank. Over the last 60 days, no analysts have increased their earnings estimates for the current quarter, while three analysts have revised the estimate downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from 24 cents per share to 22 cents in that period.

ADVERTISEMENT

Given the way analysts feel about Nuance Communications right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

Looking to Trade Options? 

Each week, our very own Dave Bartosiak gives his top options trades. Check out his recent live analysis and options trade for the NFLX earnings report completely free. See it here: Bartosiak: Trading Netflix's (NFLX) Earnings with Options or check out the embedded video below for more details:

 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Nuance Communications, Inc. (NUAN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research