How investors are hedging Sprint
Sprint is up nearly 50 percent in the last month, and traders are apparently looking to protect those gains.
optionMONSTER's Depth Charge system shows that more than 23,000 October 5 puts were bought for $0.38 and $0.44. These are clearly new positions, as open interest in the strike was mere 42 contracts before the session began.
Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff. The contracts can be used to make outright bearish bets, but Friday's puts were likely purchased as protective hedges on long-stock positions given the recent rally. (See our Education section)
S rose 2.37 percent to $5.19 on Friday. The cell-phone carrier dropped to $3.14 after its last earnings report on Aug. 4 but bounced a few days later when the company named a new chief financial officer and FBR Capital upgraded the stock to "outperform" from "perform" with a price target to $6. Shares have been rallying since, despite a brief pullback when the broader market plunged.
Overall option volume in Sprint reached 34,500 on Friday, more than triple its daily average for the last month. Total puts outpaced calls by 3 to 1.
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