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Sprint Corporation (S) Sees a Rare Uptick in Call Volume

S' February 2014 9-strike call was in focus on Monday

by 12/3/2013 11:17 AM
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Option Brief: Sprint Corporation (NYSE:S) option traders have been placing bearish bets at an accelerated clip of late, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the course of the past 50 sessions, the stock has tallied an ISE, CBOE, and PHLX put/call volume ratio of 0.73, which ranks in the 89th percentile of its annual range. In other words, puts have been bought to open over calls at a near-annual-high pace in recent months.

In yesterday's session, though, it was calls, and not puts, that traded at a faster-than-usual rate, with the contracts nearly doubling the average daily call volume. The majority of the day's activity centered around one massive block of 15,000 February 2014 9-strike calls, which changed hands shortly after the open on the ISE. The calls traded closer to the ask price, implied volatility ticked higher at the transaction, and open interest rose overnight, suggesting buy-to-open activity. In this scenario, the speculator is betting on S to tackle the $9 mark over the next several months.

Technically, Sprint Corporation (NYSE:S) hasn't traded north of $9 since SoftBank Corp. acquired majority control of the company in July, and Sprint dropped "Nextel" from its name. The stock, however, has rallied roughly 45% in the ensuing months, and was last seen lingering near $8.22. With short interest accounting for 12.6% of the equity's available float, it could be that yesterday's out-of-the-money call buyer is a short seller hedging his bearish bets against a continued move higher.


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