Big three-way hedge in T-Mobile

optionMONSTER

A large three-way combination trade dominates the option activity in T-Mobile this morning.

optionMONSTER systems identified the purchase of 20,634 September 22 calls for $2.88 in volume below previous open interest of 21,262. At the same time, the trader sold 20,634 January 23 calls for $3.25 and bought the same number of January 20 puts for $0.59. Volume at both of those strikes was more than open interest, so those are clearly new opening positions.

The investor is apparently rolling a collar position forward as part of a hedge on long shares. He or she is buying back the short calls in September and we can see the corresponding open interest in the 19 puts, which will expire worthless at the end of today's session. The trader then ends up with an in-the-mone y collar in January. (See our Education section)

TMUS is down 0.9 percent to $24.84. The wireless carrier has been bouncing between $23 and $26 since late June.

More than 63,000 TMUS options have changed hands already today, compared to a daily average of just 2,572 in the last month. 

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