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T-Mobile US Inc (NYSE:TMUS) has been churning between $30 and $33 since reporting earnings in late February, amid talk of a looming bid from Sprint Corporation (NYSE:S). In spite of this, a handful of option traders in today's session are betting on the stock to topple the north end of this range over the next four weeks. In fact, the equity's 30-day at-the-money implied volatility (IV) is 12.4% higher at 41.6%, echoing the escalating demand for short-term contracts.
Of the 10,000 calls traded on TMUS today, roughly half have crossed at the April 32 strike. Almost all of the 4,950 calls -- including a large block of 3,006 --have traded at the ask price, IV has jumped 5.5 percentage points, and volume outstrips open interest. Summing it all up, it appears that new bullish positions are being initiated. Breakeven (at expiration) for today's traders is $33.75 (strike plus volume-weighted average price of $1.75), or territory TMUS has not seen since Jan. 9.
Widening the sentiment scope reveals that calls have been preferred over puts in TMUS' options pits in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 13,126 calls have been bought to open on the stock during the past 20 sessions, compared to 3,948 puts, resulting in a top-heavy call/put volume ratio of 3.32.
Looking elsewhere, a portion of this activity could be at the hands of short sellers hedging against any unexpected upside, particularly at out-of-the-money strikes. Short interest jumped 15.1% in the latest reporting period to 11.46 million shares -- the most since the beginning of the year. In today's session, T-Mobile US Inc (NYSE:TMUS) is trading higher, with the stock last seen up 2.2% at $32.88.