Call seller bets on limited upside for NII

NII Holdings is trying to bounce, but one investor doesn't see much upside.

optionMONSTER's monitoring programs detected the sale of about 3,000 August 10 calls on the emerging-market telecom stock for $0.45. Volume was more than 160 times open interest at the strike.

The trader is now obligated to sell shares for $10 if they close above that level on expiration, but including the credit earned their exit price would be $10.45. He or she probably owns stock and is using the contracts as a hedge. (See the discussion of covered calls in our Education section.)

NIHD is up 2.4 percent to $9.39 today but has lost more than half its value so far this year. The stock has been trending lower as high costs and weak pricing in Latin America hurt profitability.

Given all the downward momentum, some traders might doubt NIHD's ability to rally for more than a limited time. If true, that would help explain today's call selling.

Overall option volume is about 2-1/2 times greater than average so far today.

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