Sprint Nextel Corp. (S) – Long-term bullish trades in the May 2010 contract pushed the telecommunications company onto our ‘most active by options volume’ market scanner this morning. Shares have added nearly 1.25% during the session to stand at $3.45. Options activity by one investor suggests the stock may recover significantly by expiration in May. The trader appears to have sold 7,500 puts short at the May 2.0 strike for 15 pennies apiece in combination with the sale of another 7,500 puts at the higher May 3.0 strike for 53 cents each. The investor sold the puts in order to finance the purchase of 10,000 calls at the May 5.0 strike for 40 cents per contract. The three-legged combination play results in a net credit to the trader of approximately 28 cents. Additional profits are available if shares rally 45% from the current price to surpass the breakeven point at $5.00 by expiration. We note that implied volatility jumped 17% during the session, from an opening value of 80% to the current reading of 93.5%. Analysts currently predict a 14 cent per share loss when quarterly earnings are revealed ahead of the market opening on October 29.
Will S beat earning estimate...Palm sold a lot of Pre phones with S contracts.....IMO Blue