NII Holdings has been falling for years, but now traders apparently think that the selloff might be ending.
optionMONSTER's tracking systems detected the sale of 3,000 January 6 puts for $1.40. Volume was more than triple previous open interest at the strike, indicating that new positions were initiated.
Selling puts locks in the level where the investor must buy shares in the debt-laden telecom, in this case for $6. The trader will keep the $1.40 as profit if the stock is above that level on expiration. Even if it goes below $6, the effective entry price would be $4.60 because of the credit earned. (See our Education section)
NIHD is down 6 percent to $5.88 in midday trading. It peaked at $90 in 2007, rolled over at $40 in 2011, and accelerated to the downside through late last year. The shares have been moving sideways more recently, which could be leading some chart watchers to believe that it's due for a bounce.
The company, which provides mobile service in Latin America, trades for only half its book value. Short interest also represents almost half of the float.
Total option volume in the name is quadruple the daily average so far today.
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