Bulls Boost Call Activity in Sprint

Bulls Boost Call Activity in Sprint

Heavy call volume hits the tape in November, October series in Sprint.

September 15, 2009

On today’s Options News, Karla Yeh and the www.ONN.tv team look at Tuesday’s pre-market price action in the broader market, highlighted by Far-exceeding retail sales and Producer Price Index figures. The PPI surged 1.7%, its fourth gain in five months, and August retail sales climbed 2.7%, the most in three years. On Monday, the Dow rallied 21 points to 9,627 and the S&P 500 gain 7 points to 1,049. The CBOE SPX Volatility Index (VIX) dropped more than 1% to less than 24 yesterday.

Early Market Indications

Ahead of the U.S. market open, S&P 500 futures are up 0.5 point to 1,044, and international markets are mixed, with Hong Kong down 0.3% and Europe up 0.3%.

Call Buying in Sprint

Sprint (S) saw heavy call buying activity the same day Hudson Square Research upgraded the mobile phone company to buy from hold and established a target price of $8. Looking at the Jan. 7.5 calls, an investor bought these options 10,000 times. We also saw call buying in the Nov. 8 and Nov. 5 series. In addition, an investors traded the Oct. 4-5 risk reversal 500 times (selling the put and buying a call) on a bullish bet for further upside. We also heard rumors that Deutsche Telekom is not planning to acquire S by the end of the year, which could be priced into the market as well. S shares closed up 38 cents to $4.15 (a 10% gain on the day).

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