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Nokia Corp. (NYSE: NOK) opened at $30.57. So far today the stock has hit a low of $30.33 and a high of $30.74. As of 10:35, NOK is trading at $30.45, up $2.04 (7.2%).The stock has reached a new one year high today after its earnings release this morning. With profit more than doubling from Q2 2006, shares are soaring. Jim Cramer is confident in this stock as well, calling it a "major comeback." He expects that it will be difficult to find growth in stocks this year, but tech will be one of the few areas you can count on for growth in the last quarter this year, and with Nokia gaining market share over a struggling Motorola Inc. (NYSE: MOT), this is a good place to be. Technical indicators for NOK are bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $25 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make an 8.7% return in less than 6 months as long as NOK is above $25 at January expiration. NOK would have to fall by more than 17% before we would start to lose money.
NOK has been steadily rising over the past year and hasn't been below $25 since May. The stock has shown support around $26.25 recently. This trade could be risky if NOK gets hurt by Apple's (NASDAQ: AAPL) iPhone, but preliminary reports are that the iPhone did not do as well as was expected.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in NOK or AAPL. He does own and control a long hedged position in MOT.
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Reader Comments (Page 1 of 1)
8-02-2007 @ 1:46PM
Jim Galpin said...
I've been waiting for an article like this..."Cramer sweet on Nokia." About two years ago, right after I'd bought NOK in the $11 range, Cramer comes on his radio show and for fifteen minutes he tells all about the river, Nokia, and what a smelly river it is, and that Nokia stock smells even worse. He went on-and-on about how lousy the company was. NOW that NOK is trading close to $30, he's "sweet on Nokia." Cramer is, in my opinion, one of the best CONTRARY INDICATORS I'ved ever seen, as far as the stock market goes. How he makes a living in this sector is beyond me, but it isn't from picking stocks.
ps. this is one of MANY stocks he has been 100% WRONG on.
8-02-2007 @ 1:58PM
mongul said...
"preliminary reports are that the iPhone did not do as well as was expected."
Whose expectations are we talking about? The iPhone did not do as well as was expected by excessively exuberant analysts one upping each other, the WSJ has a good story on this. Component suppliers are not seeing any trimming of orders, though. And did Nokia (or anyone) ever sell 270,000 phones in 30 hours (U.S. only, through AT&T, with a 2-year contract and at $600 a pop)? :-)
http://blogs.wsj.com/numbersguy/analysts-ponder-iphone-sales-forecasts-158/
8-02-2007 @ 2:36PM
ouj said...
"And did Nokia (or anyone) ever sell 270,000 phones in 30 hours"
Probably not - but Apple could sell 270,000 rocks with Apple logo for the Apple cult members if they wanted to.
(Nothing against iPhone - interesting device no doubt)
8-02-2007 @ 2:42PM
jou said...
"And did Nokia (or anyone) ever sell 270,000 phones in 30 hours"
No, but they are on their way to selling about 400 million phones this year.
8-02-2007 @ 5:02PM
William Martin said...
I agree with #1 comment by Jim. He hit it right on the head about "Fireball" Cramer and his waffling ability or his convenient forgetful memory about his recommendations of old. I know we are to use our own judgement on his or anyone's recommendations but its sad that we can't depend on what he says even though I 'm sure he is a fine person since he has his "charitable trust" and other good causes he gives to.By the way Cramer is looking a little to thin physically on TV to me.
8-02-2007 @ 8:47PM
Mr. Wolf said...
"Whose expectations are we talking about? The iPhone did not do as well as was expected by excessively exuberant analysts one upping each other, the WSJ has a good story on this. Component suppliers are not seeing any trimming of orders, though. And did Nokia (or anyone) ever sell 270,000 phones in 30 hours (U.S. only, through AT&T, with a 2-year contract and at $600 a pop)? :-)
"
I don't know, but Apple does not sell that much every day. Nokia sells some 1.1-1.2 million phones a day. They also sell more expensive phones than the iPhone, although I don't the numbers.
Actually, they sell handsets in anything between USD 40 to USD 1500, if the price is measured as operator-unsubsidised.