Blackberry Ltd (BBRY): The One Stock Investors Love to Hate

One of the reasons I am “addicted” to trading stock options is the exciting rides that I enjoy (with minimal risk) when stocks go on rocket-propelled highs only to crash to unimaginable lows while providing unlimited possibilities to make profits.

Hence, my high-hunting instincts kicked into overdrive after a Reuters report that Samsung was in talks to acquire Blackberry (NASDAQ:BBRY) sent the stock on a ballistic mission to the north. By the way, Blackberry has debunked the news and the stock has given off some of those gains; nonetheless, it got be back to looking at Blackberry in 2015.

Blackberry with its market capitalization of $5.60 is a provider of wireless solution, comprised of smartphones, service and software. The Company is engaged in the development of integrated hardware, software and services that support multiple wireless network standards. The Company’s portfolio includes the BlackBerry wireless solution, the BlackBerry Wireless Handheld product line, software development tools and other software and hardware.

I wrote extensively on trading BBRY options last year as you can see here, here and here. Therefore, I’m back to exploring BBRY options this year. As I have mentioned in the introductory piece, shares of Blackberry soared impressively after a Reuter’s reported that Samsung was in talks to acquire Blackberry for $7.5B to send the stock on a 29% flight after it has been channeling for the last couple of months.

Interestingly, Blackberry has officially denounced the report according to a statement that reads:

BlackBerry Limited (“BlackBerry”) is aware of certain press reports published today with respect to a possible offer by Samsung to purchase BlackBerry. BlackBerry has not engaged in discussions with Samsung with respect to any possible offer to purchase BlackBerry. BlackBerry’s policy is not to comment on rumors or speculation, and accordingly it does not intend to comment further.

Interestingly, the stock soared 25% yesterday to a new 52-week of high of $12.63 on the news of the “unconfirmed” acquisition.  As expected, the stock has already dropped 15.52% to a $10.64 as at 10.24AM EST today.

 Takings from the Recent Events Surrounding BBRY

Firstly,  the fact that the “news” suggests that Samsung wanted to buy Blackberry for $7.5B invariably suggest that someone thinks that Blackberry is inherently worth $1.9B or 33.92% more than its current market capitalization of $5.60. Hence, we can make a case that shares of Blackberry are currently undervalued at their $10 trading price.

The second take takeaway is that investors are watching the shares of Blackberry keenly and any positive news from the stock is sure to send it into bullish overdrive. This is evident in the 25% gains recorded within 24 hours of a false acquisition news.

The third takeaway is that you should be bullish on Blackberry because 2015 is a year of positivity for Blackberry. We can expect the company to move forward on the path to profitability as the new line of Blackberry devices and enterprise solutions continue to make waves in the market.

How to Trade BBRY Options

Blackberry is set to report its Q4 2015 results on Mar 27 and I am optimistic that another ray of sunshine will shine from the company’s financials for the fourth quarter. I recommend buying BBRY call options and I think you will do well to buy the BBRY Mar 2015 8.000 call (BBRY150320C00008000) at an asking price of $2.80.

— Daily Option Alerts

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