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Huge trade sets floor in Sprint for year

Chris McKhann (chris.mckhann@optionmonster.com)

An enormous put sale in Sprint Nextel sees the stock holding at or above current levels through the rest of 2012.

A trader sold 100,000 January 3 puts for $0.68. The volume was 10 times the previous open interest at that strike and its average daily turnover is 24,000, so this single print is clearly a new position.

S is up 2.21 percent this afternoon to trade at $2.78. It has been climbing since hitting a 52-week closing low of $2.12 on the last day of January. Shares are now at their highest prices since mid-November, but they are still far from their levels above $5 at the end of July.

The put selling is a bet that S will be above the $3 strike price by expiration in January 2013. The trader is also showing a willingness to buy shares if they remain below the strike and are assigned. If that occurs, he or she will be on the hook to buy 10 million shares of S, though at an effective price of $2.32.

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