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How call spread is playing T-Mobile

Chris McKhann (chris.mckhann@optionmonster.com)

A large call spread topped the option activity in T-Mobile as shares dropped yesterday.

optionMONSTER systems show that a trader sold 7,500 August 26 calls for $1.11, below the listed bid price at the time, against previous open interest of 12,711 contracts. At the same time, he or she bought 7,500 November 26 calls for $2.06 in volume far above open interest of just 181 at that strike, clearly indicating a new position.

This could be a calendar spread , which would have a bullish bias up to the $26 level. It is also possible that this is a roll, with the trader selling a long-call position in August and moving it out to December at a cost of $0.95 for an additional three months of upside exposure. (See our Education section)

TMUS lost 3.83 percent yesterday to close at $24.37. The wireless carrier hit a high of $25.72 on Monday.

Total option volume in the name was 25,750 yesterday, compared to a daily average of 7,321 contracts. Only 812 puts traded in the session.

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