BlackBerry Ltd (BBRY) Stock: Don’t Gamble, Look At The Data Points

Understanding the behavior of other market participants can give you an idea of what may or may not happen with BlackBerry Ltd (NASDAQ:BBRY) stock.

– Options activity can provide a clue to important levels.

– The Point of Control can help you visually understand the fairest price.

– Short interest is reasonably high in BlackBerry stock.

When I see BlackBerry Ltd (NASDAQ:BBRY) being touted as a buy, I wonder what hopeful scenario people are fantasizing about?

Svetlana Dikhtyareva / Shutterstock.com

The long-term chart shows a collapse in the trend. I know what you are thinking. If I buy the shares at a discount, then I will make a killing when the stock goes higher. That is a feel good psychological emotion. What if that does not happen? Yes, this chart is after the fact, but as I always say you need to be prepared for two scenarios: going in your favor and going against you.

(Source: Yahoo Finance)

One reason I don’t fully buy into the pure fundamental analysis approach is that it ignores market structure (1), fails to take into account what the other players are focusing on and is heavily opinion-based resulting in cognitive dissonance. Remember, the minute you enter the market, you are at the mercy of the market. We can only control entry. We have no control over the return.

What Options Activity Is Telling You

Options activity tends to precede stock price movement. I have noticed this on multiple occasions. So where can BlackBerry Ltd (NASDAQ:BBRY) stock go? When I see that there are barely any Blackberry options trading a few months out, it tells me to find another opportunity. There is a lack of conviction in the stock. Generally, you want to see at least 1000 contracts in volume. It informs you of liquidity and gives you a better picture of where the areas of interest are. If no options are being traded, you are a lone wolf trying to guess direction. The opportunity to make a profit becomes more difficult. It will also be important to monitor the open interest daily. Increasing open interest can be interpreted as a bullish sign for the stock. Using options data gives you a dynamic view of stock price behavior.

Also read: Should You Buy BlackBerry Stock After The Latest Earnings Beat?

(Source: ThinkorSwim)