Sprint Eyes Best Day Ever on T-Mobile Merger

Call traders have circled both S and TMUS in recent weeks

Managing Editor
Feb 11, 2020 at 10:41 AM
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The unmissable news making headlines this morning is the Sprint Corp (NYSE:S) and T-Mobile Us Inc (NASDAQ:TMUS) merger, which was earlier approved by U.S. Judge Victor Marrero. The $26 billion deal has already received criticism from states cautioning violation of antitrust laws regarding wireless carrier pricing. Traders have been quick to ignore such criticism thus far, as the two mobile carriers sport 72% and 9% gains out of the gate, respectively. 

Talks of the M&A go as far back as early 2018, so its no surprise the long road has sent both equities surging. Taking a closer look at Sprint stock, it is now eyeing its best daily percentage gain ever, and is fresh off a two-year high of $8.45. Year-to-date, the security now boasts a 57% gain.

Call traders have been surrounding S for weeks, with its 10-day call/put volume ratio of 4.88 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranking in the 92nd annual percentile. In other words, calls have been purchased over puts at a faster-than-usual clip.

Switching over to T-Mobile, the equity is fresh off a record high of $95.23 this morning. Longer-term, support at the 80-day moving average helped TMUS make its way to a 37% year-over-year gain.

From a more technical standpoint, call traders have also been circling T-Mobile stock, with the security's Schaeffer's open interest ratio (SOIR) coming in at 0.44, which ranks in the lowest percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

 

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