Sprint Corp (S) iPhone Plan Boosts Bulls' Spirits

Sprint Corp (S) is sharply higher today, after unveiling a new plan for Apple Inc. (AAPL) iPhone users

by Alex Eppstein

Published on Aug 17, 2015 at 1:22 PM
Updated on Aug 17, 2015 at 2:04 PM

Sprint Corp (NYSE:S) is breaking out on its new plan for Apple Inc. (NASDAQ:AAPL) iPhone users. Under the "iPhone Forever" program, an existing customer participating in any unlimited individual or family plan can pay an extra $22 month, allowing him to upgrade his device to the newest iPhone model at any time.

Wall Street is reacting positively to the news, as S shares have surged 12.8% to trade at $4.72. Heading into today, the stock was just a shade above its year-to-date breakeven mark, but has now put that level in its rearview mirror. In fact, since touching an all-time low of $3.10 late last month, S has jumped over 52%.

In the options pits, overall volume is running at six times the intraday norm, and calls outstrip puts by a 4-to-1- margin. Most active is the in-the-money August 4.50 call, with roughly 11,000 contracts on the tape -- and potential buyers eyeing extended gains through this Friday's close, when front-month options expire.

Today's activity simply echoes the withstanding trend among S traders. During the last 10 weeks, the equity has amassed a call/put volume ratio of 8.60 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks just 8 percentage points from an annual high.

However, others on Wall Street aren't so sure. Ninety percent of analysts consider Sprint Corp (NYSE:S) a "hold" or worse. Also, short interest popped 16.5% during the latest reporting period, and now represents close to 16% of the stock's total float -- or about a week's worth of trading, at typical volumes. If S can build on today's upward momentum, an unwinding of this skepticism could result in tailwinds.

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